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I, Cringely - The Survival of the Nerdiest with Robert X. Cringely
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The Pulpit
Pulpit Comments
August 10, 2007 -- The $200 Billion Rip-Off
Status: [CLOSED]

Bob, you sound surprised but such is life when dealing with pseudo-monopolies, lobbyists and greed.

Should you be surprised that the phone company failed you?! Very few companies don't fail me today and I am left choosing the lesser of the evils.

Jim R | Aug 10, 2007 | 4:22PM

Get real - it's a monopoly, plain and simple. Welcome to the new boss, same as the old boss. A companies greatest guiding 'moral' law is to make money. Money talks, politicians listen - it's a simple equation, really.

J Price | Aug 10, 2007 | 4:31PM

J. Price:

If, as I suspect, you're referring to "corporations" rather than the broader set of "companies," then you should hardly be surprised. Corporations are legally required to make money, more or less. It's the only reason they exist, after all.

Brian | Aug 10, 2007 | 4:35PM

It's time for Congress to allow new private companies to clear away the dead wood of the old telephone/cable monopolies. Did everybody forget? We don't like Monopolies in the US; unless of course they pay lobbyists to grease the wheels of Congress.
I hope you are wrong about Google's bid a while back; consumers need a gorilla on their side.

Will | Aug 10, 2007 | 4:40PM

Knowledge is sometimes very depressing. It's not even worth pursuing a class action lawsuit.Who would benefit the most? The federal government and the lawyers, not the consumer. The money would transfer from one set of pockets to another, and we'd still have sucky broadband. Talk about feeling angry helpless and depressed!

Kevin Kunreuther | Aug 10, 2007 | 5:04PM

Bob, you and I have previously hashed out the follies and scams of the incumbent telecoms. Not only did they rob the American People of $200B, but as you pointed out, even shareholders got nicked due to accounting tricks like depreciation games, "missing" assets, and M&A costs. You'll be interested to know that there was fraud and deception for the non-profit sectors too, which you state wasn't criminal. Google around and you'll find many cases where the e-Rate program that was established in the 96 Act allowed telecoms to bilk Federal and State agencies for deploying services to schools, hospitals, etc. A very interesting example of this is Al Gainier, the CEO of Education Networks of America (ENA), who I had the great fortune of narrowly avoiding an entanglement with while I was running a CLEC.

It's sad on many levels. It reinforces the cynic's view that only money and power matter. The actual victim of this crime doesn't even realize that they've been swindled in a meaningful way and even if they did, could probably not mobilize to do anything about it. And to top it all off, we've just sacrificed our future opportunities for frankly some rather measly returns in the telecom funds over the last 10 years.

Scott Kozicki | Aug 10, 2007 | 5:05PM

What is truly unfortunate about the phone company monopoly (similar to oil companies) is that they are blessed by the government to add supplemental taxes that do nothing at all. For example I am taxed by Verizon about 1% for rural access service. How do I know that Verizon is using that money to build phone service in rural areas?

I suspect they aren't.

CVOS man | Aug 10, 2007 | 5:05PM


I'm very sorry to hear that the telcos "lost" 22% of their equipment. I'm working on a little project that might help locate this "missing" equipment: http://www.globalshout.net

Of course, I may find more than some missing telco gear, but them's the breaks.

Glenn Powers | Aug 10, 2007 | 5:33PM

I say they can keep our broadband future, if they give us back our democracy.

matt | Aug 10, 2007 | 6:35PM

Here in Sweden one can get 100/100Mbit for $40 month in many places. Not as cheap as in Japan but still reasonable.

I feel sorry for the american people with their poor internet-connections. After all the internet was invented in the US.

Swedish Bastard | Aug 10, 2007 | 6:38PM

A similar situation exists in Canada with the government regulated telcos. Dianne Francis described the situation in her July 18 2007 column in the Financial Post:

http://preview.tinyurl.com/2ahkqf

Paul H | Aug 10, 2007 | 6:42PM

Please pitch this tale to Frontline.

Kenny Mann | Aug 10, 2007 | 7:53PM

This is a perfect example of why government regulation rarely gives you what you want. Monopolies are bad for the consumer because they must increase revenue per customer rather than growing their customer base. That is especially true when it is a government mandated monopoly.

Phillip Toland | Aug 10, 2007 | 8:10PM

Well, everyone has said it, so I'll say it.

This is what you get when the state controls the private sector and the private sector is allowed to bribe the state's representatives.

I'm an anarchist. You can't have "corporations" without the state.

Get rid of the state, get rid of corporations. You're left with a bunch of people who can form "companies" - which can have no power that their customers don't freely give them. (We're not in the days of the East India Company and the Hudson Bay Company, okay? Except in practice because nobody but the company-paid-for state can do anything about them.)

It's that simple. But nobody believes this, because everybody thinks they can use the state to benefit themselves and their ideology.

And of course this is what the crooks who run the state and the corporations count on.

Wise up.

Oh, wait... "Wise up"? What am I thinking? You're humans. Not possible for you to "wise up". Not in your genetic code....

Richard Steven Hack | Aug 10, 2007 | 8:35PM

For some perspective, here in Australia we're dominated by Telstra, the former govt-owned monopoly formed from the merger of Telecom and OTC in 1993. It's now fully privatised since Nov 2006 and been run by your Sol Trujillo who gets $3m a year and Phil Burgess since July 2005.

The entire copper infrastructure in this country is owned by Telstra, who are obliged to provide wholesale access to third party providers at 'reasonable' rates. Telstra are currently the most expensive phone and Internet service provider at approx. AU$40/mth per landline + call costs, and AU$70/mth for 1.5m/256k ADSL. The discount Telstra actually offers to wholesalers for access to its copper is never less than 15% in real terms so the cheapest phone/internet service provider is also never going to be cheaper than $34/mth and $69/mth respectively, without making it a loss-leader for other bundled offerings, which is what they have to do.

Since taking over the reigns from Ziggy Switkowski in July 2005, the Sol and Phil puppet show has brought their belligerent corporate American attitude to our govt policy and community standards, and effectively wiped away any shred of respect Telstra ever had. The unelected Sol regularly criticises our elected prime minister and cabinet ministers for not giving the dominant Telstra a free reign to do what ever the hell it likes with its monopoly.

Recently its main competitor Optus was awarded a govt-sponsored contract to provide upgraded broadband access to our rural and remote communities. Telstra has for years ignored this demographic because it didn't know how to make enough money out of them. Optus did and reliably. After the contract announcement Telstra proceeded to lambaste Optus, the govt, the Singapore govt and the media and anyone else it could get attention from.

Telstra have setup a very aggressive media and public relations dept with deep pockets that will stop at nothing to decry any form of criticism. The Telstra call-centres are a draconian abomination, not just for customers, but for the staff also. The situation is so bad that earlier this year Four Corners did a documentary on the suicide rate of Telstra call-centre and field staff. The staff that remain are so scarred to speak about it they're getting ill with the stress.

I'm not an expert on this and don't know if it would really work, but I had an idea about how to fix this problem that might also translate for America. If we truly separate the provision of 'infrastructure' (the copper/fibre/coax/wireless/etc) from the provision of 'services' (Internet/phone/TV/etc) running over that infrastructure, and mandate the separation, much like the Chinese-wall policy for stock brokers/advisers, would that fix it? Perhaps all infrastructure could be entirely owned and managed by local and regional councils to ensure compliance with local environment laws and community standards. Service providers then just complete to provide the same thing but with improved speed/higher reliability/lower price – the only things we consumers most need.

It's crazy enough of an idea that it just might work.

Jeremy K | Aug 10, 2007 | 9:10PM

The backbone should be government owned and maintained. Service providers in turn should pay States for access to the backbone to provide services to residents.

Instead of looking at the backbone as something onerous which tears through revenue States should be looking at it as a money generating resource, much like Alaska does it's oil.

I would much rather my state generate money through bills I'm already paying (cable, phone, internet access) than through more taxation.

tom bar | Aug 10, 2007 | 9:26PM

tom bar >"The backbone should be government owned and maintained. Service providers in turn should pay...for access to the backbone to provide services to residents..."

You must mean something like this or this. Simple and easy to do but NOT politically correct at all.

daCascadian | Aug 10, 2007 | 10:07PM

>You must mean something like this External Link or this External Link. Simple and easy to do but NOT politically correct at all.

daCascadian,

Yes, something very much like that.

I think this link which describes the competitive advantage of a fiber optic network hybrid really does the selling for the idea.

http://www.dynamiccity.com/projects/studies/cedarfalls.php

It essentially shows how Waterloo lost out to Cedar Falls which had previously perpetually been behind Waterloo, after Cedar Falls took control of the backbone, and monetized it. The resulting boon in business (11 businesses relocated from Waterloo to Cedar Falls) was well worth the initial expense. In addition Cedar Falls very soon will profit from the services provided over it's network, in addition to providing low cost services like cable advertising for businesses within it's borders, in addition to cable, phone, and internet services to Cedar Falls Residents.

My preference would be fiber to every door however. Such a deployment would withstand time the best.

I really appreciated your first link because it showed how residents of Grant County WA (A rural county) are receiving better telecommunications services than I am for less than half the cost I'm paying in a large metropolitan area. That just really blows the argument that rural must equal inferior due to distances involved in rolling out fiber, right out of the water.

It can be done, and it can be done at a profit.

tom bar | Aug 10, 2007 | 10:49PM

It's amazing how regulation breeds corruption.

A good example of this is in Canada the government will set rates it's willing to pay for generic drugs, sometimes around 70% of the price of the brand name drugs. So the drug companies charge 70%. The same generic drugs are often available in the United States for just 10% of the price of the brand name drug. But what drug company here would charge that when they can get 70%?

Virtually every example of massive corruption and public swindling happens in industries which are heavily regulated.

Noah Aboussafy | Aug 10, 2007 | 10:58PM

Canadian gov't paying higher generic prices than the US is an example of corruption? How? It is a negotiated deal the gov't strikes with the company. Similarly, the companies charge the Canadian a whole lot less for non-generics than Americans do.

Does this mean the non-regulated US system is corrupt as well?

In many cases, as in US anti-trust laws, regulation reduces corruption and enhances competition.

johnmeister | Aug 11, 2007 | 12:46AM

So, what provider offers 100-megabit-per-second service in Japan for $14? Hello Kitty? Ompanman? My provider is charging me 3,400 yen a month( about $28.50) and at best I get 30 megabit-per-second. On average it's hovering around 1.5 megabit-per-second.
Bill B
Nagoya Japan

Bill B | Aug 11, 2007 | 12:52AM

PBS/Bob,

Can we please get a system of comments that

1. Numbers comments so that when we come back we can pick up reading where we left off.

2. A system for voting up, or down comments so that we can down vote the abusive comments, so that abusive commenters at least get a sense that their constant abusive comments aren't appreciated.

Better yet a system that once a certain number of negative votes has been reached (say -7) the down voted comment is recessed, requiring a click to unfurl and read it. Not that I want negative comments ignored or hidden, just the really abusive ones, and I think commenters will be able to judge the difference.

tom bar | Aug 11, 2007 | 1:33AM

PBS/Bob,

Can we please get a system of comments that

1. Numbers comments so that when we come back we can pick up reading where we left off.

2. A system for voting up, or down comments so that we can down vote the abusive comments, so that abusive commenters at least get a sense that their constant abusive comments aren't appreciated.

Better yet a system that once a certain number of negative votes has been reached (say -7) the down voted comment is recessed, requiring a click to unfurl and read it. Not that I want negative comments ignored or hidden, just the really abusive ones, and I think commenters will be able to judge the difference.

tom bar | Aug 11, 2007 | 1:33AM

The $14/month in Japan you quote must be the ISP charge only.
In addition, broadband users pay NTT around $40/month for fibre/ADSL connection and modem rental.
Stuart N, Tokyo

Stuart N | Aug 11, 2007 | 2:08AM

Stuart N, Do you have links for this? There are many other companies selling BB besides NTT right (and for less)?

Benny | Aug 11, 2007 | 5:01AM

I know it's off-topic, but was anyone else sorry to hear Bob wasn't Fake Steve Jobs?

Nick Thomas | Aug 11, 2007 | 5:58AM

More info about Japan broadband prices in the last week's article and here:

http://www.pbs.org/cringely/pulpit/2007/pulpit_20070720_002525.html

fyi | Aug 11, 2007 | 8:15AM

http://209.85.165.104/search?q=cache:U7E-1Enj2jsJ:www.redherring.com/ResearchAbstract.aspx%3Fp%3D103+cost+to+deploy+fiber+to+the+home&hl=en&gl=us&strip=1

-Sorry for posting a link to a Google cached page, but according to RedHerring.com (link is no longer available), the cost for deploying fiber to each and every US household (urban & rural) would be $233 Billion. Thanks Bob for such a well written article that I certainly hope will bring attention to an issue that is crucial for our nation's future. You hit the nail on the head with this one.

Kenny Bain | Aug 11, 2007 | 9:52AM

How interesting that while I was reading this article I noticed one of the sponsored links was for Verizon Wireless. Ha! The corruption has even seeped into your site. ;-)

I like Milton Freidman as an economist and the "free to choose" notion is just a fantasy when it comes to Internet service in the US. I'm basically pro free enterprise and anti regulation but in this case I'd like congress to stick it to the telcos with penalties and taxes that cannot be passed on to the consumer.

D. B. | Aug 11, 2007 | 10:33AM

Bob, please update your site, its looking tired and the comments section should enable threading for clarity. These are important topics and they deserve a professional platform.

James H | Aug 11, 2007 | 10:43AM

Spare a thought for those of us who live "down under". With a national telecommunication company that was previously government owned being sold into private hands and then run into the ground.

With a profit margin that exceeds 50% and a management who want want to lock out all competition for 10+ years, we are also being told that fraudband @ 256k is fast enough.

Combined with an industry that is forced to charge a per-GB rate for downloads, and many also including uploads in this formula, we are still looking at increasing prices and limited service.

We are being held ransom by a group of people who learn their business practices at the head of US telcos.

The best they can offer is a new network that will promise 6mbit speeds. All we need to do is agree to pay 3x what we currently pay in line rental.

Michael Pemberton | Aug 11, 2007 | 11:00AM

The problem is that we let the phone and cable companies define what broadband is. Add to that a pitiful understanding of the world outside the US and lack of even basic technical understanding by the voting public, and it is a recipe for lousy service.

The biggest problem is that they are in constant fear of common carrier status. This means they have no control over what is done on their network. This works to their advantage in telephone systems (they can't be convicted for aiding and abetting criminals who use the network for "evil"), but becomes a major problem when they start selling data and video services. If you have a Skype phone, they'll loose the $20-$30/month you're paying them for phone service. If you use a streaming video service (they exist in these 100Mbps countries), you'll not need to pay their $50+/month for television service. It's all about incremental revenue and APRU (average revenue per unit - you and I are a units). The more incremental revenue, the higher the ARPU, and the happier Wall Street is. That's why they offer such a great teaser rate to switch.

eric | Aug 11, 2007 | 12:00PM

I was disappointed that your article did not credit Bruce Kushnick by name or mention his book other than in passing. As far as I'm aware, he was the first to expose the total scope of how badly the pubic has been duped and swindled by the telcos.

Steve Stroh | Aug 11, 2007 | 12:04PM

The Giant Sucking Sound of the telcos vacuuming our money was on the drawing boards even when the breakup of AT&T / Bell Labs was being executed. Do I remember a demo of a Video Phone at the World's Fair back in the 60s? Bell Labs / Western Electric could have had an HD video phone in every home by now.

Japan's NTT is run something like the old Bell Tele / AT&T, as a UTILITY. With direct gov controls. Not utopia, but better than what we have now.

Do I hear a cry: Mom, they are not playing fair! Where is ma Bell when you need her? Lets pass a law that our service must be at least as good as Japan / France or whoever, for less money.

rickscsc | Aug 11, 2007 | 12:36PM

Here in the UK, I can get 8MBits / sec for ÂŁ15 ($30) per month. This is now becoming standard with 24MBits coming soon.


Dingo Company | Aug 11, 2007 | 1:16PM

Dingo Company wrote:
Here in the UK, I can get 8MBits / sec for ÂŁ15 ($30) per month. This is now becoming standard with 24MBits coming soon.

My dear chap, you are being fleeced! I've had 24 Mbps in the UK for ÂŁ10/month for the past 2 years.

Phil Harris | Aug 11, 2007 | 3:01PM

Not many things piss me off so much that I make a comment about them, but I guess the Internet (and the speed of my access to it) means a lot to me. This set of articles has caused me frustration, anger, depression, and a feeling of helplessness when it comes to fighting the bloodsucking, soul-crushing monster that is the modern corporation. As much as we have available to us in America, so little of it is provided without being choked-off, overpriced, or misrepresented. Or even all three at once. Health care, gas mileage, internet, even our college textbooks...

What can one person do in this day and age to battle greed and corruption on this scale; to make a difference?

Johnny Q | Aug 11, 2007 | 3:36PM

What can we do to combat corruption?
Simple: be smart, selfish, and enlightened.

When you as American citizens see this kind of bullshit happening, don't think of the tragic waste and soul-crushing massive forces that you are helpless against; think of the profit potential.

In a free society, every time an industry goes slack-jawed-corrupt like this, they leave the door open for YOU to compete with them... and win.

So do it. Start your own ISP; start your own telco. Someone (or many hundreds of someones) out there has the background, training, and resources to take on the Industry and win; they're just afraid to leave their job.

Find that person and hire them. Or be that person and start your own company.... That is America in action, baby.

Apathy is utterly the enemy. Pity is the enemy, that feeling of overwhelming helplessness is the only true power that anyone has over you. Try playing poker with a tiny chip stack and winning it all; then you'll understand how important courage is individually and as a society.

Don

DonnieFour | Aug 11, 2007 | 5:34PM

Well, this is very sad and very true. This is yet another example of why companies can't be trusted with massive amounts of taxpayer dollars. Companies do NOT have consumer interests as their first priority. Most everything is so sort of scam or ripoff in this country anymore. We should just cut out the middle man this next election and have the corporations run. I don't like any of the candidates anyway, and they are all owned! Maybe we can get better broadband by electing AT&T?

robert w oldfield | Aug 11, 2007 | 6:01PM

I cannot believe the local service. Our phone company offers a "country" DSL service, that uses old phone lines and is supposedly limited to no more than 512mbps download, and something pathetic upload without having damaged packets. They charge for 29$ for 112, 39$ for 256, and a whopping 50 bucks for 512mbps. It is out of this world how they are charging more for this crappy service, than the best services cost all around. I would complain but nothing would happen. Their website hasnt' been updated in almost ten years!!! it is www.mmtcnet.com Check it out! IT doesn't even mention internet/data.

Brad H | Aug 11, 2007 | 7:21PM

I'm shocked-- shocked, I tell you-- to see so many anti-business comments on a PBS website!

Well, not so shocked. Actually it's what I'd expect.

Anyway, this piece is hugely bogus. Somehow there was all this spare cash floating around. How? $2,000 for each of 100M subscribers over ten years? $200 per year per subscriber? Ridiculous.

Show me where those numbers appeared in the financial results of these companies. You can't; it's BS. PBS.

. png

Peter G. | Aug 11, 2007 | 10:40PM

Sorry, but america has a tendency to thinking it has the better services or is the better doing things, but unfortunately this is far from being true. Unfortunately South Korea has the highest broadband deployment rate in the world, with more than 95% of internet users covered by 100 Mbps fiber optical links that carry thousands of HDTV and regular channels all all those channels are delivered to the mobile network... 100 MBPS fiber optical + mobile access for 25 bucks a month.

America has to stop spending money in wars and spend the money to develop its own country and improve people's life. Or we do this or we will be third world soon.

mike | Aug 12, 2007 | 12:26AM

Peter G.: I have a bridge in Minneapolis that I'd like to sell you.

dave | Aug 12, 2007 | 2:51AM

To Peter G: This site isn't anti-business, it's anti-dumb-business.

Anyone who has a telephone, cell phone, or cable TV, can tell you that their services suck and are way overpriced for what they provide.

Actually, you would think the feds would help out a even more with subsidizing the broadband infrastructure, seeing that the telecom companies are doing all the spying for them.

Keeping Amerika strong!

Chris | Aug 12, 2007 | 5:15AM

It's not as cheap as Japan, but you can move to Grant County in Washington and enjoy 100mbps service for $40/month.

http://www.donobi.com/services/internet_access/grantfiber.php

New muni broadband is prohibited in Washington after aggressive lobbying by the telecoms and cable companies, but three counties had existing projects and are grandfathered in. The disparity in service illustrates your point nicely. Some people still have to suffer with dial-up at 56,000bps because they can't get DSL or cable internet, others get 100,000,000bps because their local power company thought to build infrastructure while it was still legal.

Mikel Kirk | Aug 12, 2007 | 11:50AM

I lived in San Jose in the mid-90's, and witnessed first hand the new fiber/cable hybrid network getting ALMOST deployed. The fiber was on the phone pole in my backyard, but then PacBell was bought by SBC and that was that.

Archer | Aug 12, 2007 | 12:00PM

It's amazing how much the dreams of the past disappeared. For example in the 80s everybody dreamt of 32 MBit ISDN connections. In fact I somewhere have a photo of a poster which shows the digital future when all networks including the "broadband cable" merged into one big ISDN.

So, essentially we are stuck with ADSL with at most 6MBit/sec downstream and one MBit/sec upstream. At least it's not charged for by the minute as our ISPs originally wanted to do.
In fact I strongly believe the reason why we don't use ISDN for Internet anymore is that ISDN was always charged by the minute (except for a short time).

BTW, Internet+Telephone is about 50 Euros ($62) a month in germany.

Casandro | Aug 12, 2007 | 12:02PM

"America has to stop spending money in wars and spend the money to develop its own country and improve people's life. Or we do this or we will be third world soon."


Wiser words were never spoken.

DarkMantle | Aug 12, 2007 | 12:08PM

Anyone remember BPL? The power company was (and still is in some areas) trying to get in on the ATT money game.

Joe Ham | Aug 12, 2007 | 12:08PM

It's nice to be able to receive broadband (>1.5Mbs) if you are either in a town/city, or at least withing range of a CO, but for those of us who are in a rural setting, it's not so good. My ISP connection is through a satellite 'broadband' provider because we simply are to far away from everything. We get to enjoy weather-related drops, and a service throttling if we exceed a vaguely defined download threshold (300MB I think) within an equally vaguely defined time period. Download a large patch or service pack, and you are stuck at below dial-up speeds for at least 24hrs as a penalty. Somewhere I read not long ago where the FCC was supposed to raise the definition of 'broadband' to something over 2Mbs in an effort to get ISPs to boost speeds, but I doubt either will ever happen. Thanks for nothing telcos....

Don | Aug 12, 2007 | 12:29PM

Some of this dream that should have happened in 2000 looks like it is slowly coming true with AT&T Uverse and VDSL (which hits 80Mbits in lab settings.)

KatzManDu | Aug 12, 2007 | 12:41PM

IN the begining...ADSL, technically, could do over 8 mbps and is "switched" at the central office to be fast up and slow down. Pacbell didn't offer that after the first 3 months because the telcos were complaining (several started a lawsuit)that "you're making everyone an AOL" and nobody bought it, probably, because they didn't know they could. If allowed, by flipping a simple switch, your DSL could be 6 meg up and 1.5 megs down.That switch was still in place when SBC became ATT, through few people know of it.

william wallace | Aug 12, 2007 | 12:42PM

200 billion in tax credits is a rip off?!?!

How is government not stealing 200 billion a rip off?

joshua corning | Aug 12, 2007 | 12:53PM

I wonder why you don't just build your own networks. In times of cheap wireless routers and meshed routing protocolls this gets a lot easier.

Essentially you just load a special firmware onto some routers, set some parameters and they will automatically set up the routing on the current circumstances.
Theoretically you can also do it with PCs, but this is typically a lot less reliable.

Christian Berger | Aug 12, 2007 | 12:56PM

An interesting note to add is that Verizon successfully petitioned the FCC to eliminate the Universal Service charge on DSL, which is the fund that supposedly helped schools, libraries, hospitals, and public safety agencies as Bob mentioned. Immediately they replaced the FUSF fee with a "subscriber access charge". A short while later consumer outrage forced them to stop this. To make up for the reduced income to the FUSF they petitioned the FCC to start charging VoIP carriers an FUSF fee. It is unbelievable what they get away with and how our FCC helps them.

Here's a source: http://www.broadbandreports.com/shownews/77324

Nick | Aug 12, 2007 | 1:14PM

Reading all of these posts, it sounds like a lot of people agree that networking through the telcos just isn't working out too well. How can we fix this? Believe it or not, I think we have the power to sidestep them altogether. I know it sounds far fetched, but isn't there enough consumer networking technology out there for us to begin building our own distributed network(s)? Screw the slow, expensive access through the Communication Despots, we can use technology available right now to offer better, cheaper solutions from the bottom up. Who remembers the days of BBS's? Would it be possible to leverage wifi/wimax to organically grow cheap access through individuals with thick bandwidth pipes? Could we even make those pipes less relevant? I don't think we should be so afraid of splintering The Internet if we're not happy with those claiming ownership of it. It would be kind of cool to see a P2P CompuServe that ran over wireless instead of phone lines. I don't know, but there are plenty of opportunities just waiting for an adventurous, enterprising technophile to take the first steps.

If nothing else, consider supporting efforts like http://www.cuwireless.net/

dontac | Aug 12, 2007 | 1:20PM

I happen now to think that pirate wireless internet will be the only way out of this mess. Since a router with a few hundred yards' range is nothing but a card and power supply no bigger than a hamburger, it could soon reach the point where every house can have a router that costs no more than said hamburger. Unsecured high-speed routers could form a wireless parallel internet with no gatekeepers, the cost of entry nothing more than having your own router to add to the net (and being in range of others, which in turn are in range of others, bucket brigading the world over). Obviously trunks would still need to connect islands and continents, but in essence I no longer think it necessary to have telcos involved at all. The technology to obviate them looks close at hand, given adequate range and bandwidth; high-bandwidth designs for short range have been demonstrated already. The OS should be embedded, by the way, so that unsecured routers are not themselves vulnerable to viruses etc. A good pirate router should be as hard to operate as a toaster.

When every house has a router with a bit more range, there will be too many to arrest.

Tom Buckner | Aug 12, 2007 | 1:46PM

You just said that Verizon subscribers at least aren't getting charged that fee anymore. If the FCC hadn't gotten rid of it, they certainly would still be paying it. So the FCC (and its enablers in Congress) bear quite a bit of the blame. The ignorant consumers get a lot of the blame as well. Until the people can get the politicians and the FCC bureaucrats to really open up and deregulate the broadband market in all its manifestations (spectrum, spectrum, spectrum, but as for land lines that's someone else's juristiction) to competition and experimentation (foreign and domestic, I might add) and ignore the risk averse players who are more happy to sell shit at a profit, little is going to happen. But when you have FCC commissioners who apparently sincerely believe in central planning (works for India!), it's hard to see how anything will get done.

Andrew Lankford | Aug 12, 2007 | 1:58PM

As another poster said:

Please pitch this to Frontline.

Mantari Damacy | Aug 12, 2007 | 2:02PM

Isn't theft still a criminal offense. When you give someone money for goods or services and they don't supply them then they should return your money. If they don't then they should go to jail. Where is Elliot Spitzer!?!

frank | Aug 12, 2007 | 2:03PM

I'm beginning to think that it's good that our jaded "video dial tone" activist feels so depressed and downtrodden. Nothing wrong with video-on-demand if it's implemented correctly, but video, much less bi-directional video, on two copper wires is a dumb idea that deserves to fail just like analog HDTV.

Andrew Lankford | Aug 12, 2007 | 2:15PM

Oh, where is Eliot Spitzer? He's over in Albany, probably ducking a criminal indictment or two.

Andrew Lankford | Aug 12, 2007 | 2:19PM

Andrew, I don't think "video, much less bi-directional video, on two copper wires is a dumb idea that deserves to fail just like analog HDTV" is really relevant to the point Cringe was making.

Quoting from further up the page, "All 50 U.S. states and the District of Columbia contracted with their local telecommunication utilities for the build-out of fiber and hybrid fiber-coax networks intended to bring bidirectional digital video service to millions of homes by the year 2000." The original plan wasn't "video over two copper wires" at all.

Peter da Silva | Aug 12, 2007 | 3:16PM

I came here on a direct link to this third part from slashdot. Why didn't you post links to the others parts? I read this part and now wish to read the other parts, and now I'm going to have to try and dig up the links. Multi part articles should ALWAYS link to the other parts.

some one | Aug 12, 2007 | 3:56PM

I have 10mbps through Charter and routinely get 1.6mb downloads. This works great for my job because I'm constantly transferring large files.

Cable is share, I understand that, but 99% of the people in my neighborhood are just web surfing and downloading music which is capped at a certain speed.

Also, I live in a large (hahaha...St. Louis) metro area and have never had a problem with my service. I pay $59.99 a month for it.

Satisfied Charter Customer | Aug 12, 2007 | 5:33PM

Public corporations have been allowed to privately own sections of common public telecom and data infrastructure which they built, but which we still subsidized. Owning that infrastructure, they have abused it much like patents are abused. Further, there is little public oversight of long-term planning of those networks.

This mistake began with the first telegraph networks, when we failed to recognize them as common infrastructure like our highways and mail delivery; the final nail was driven in the coffin when AT&T was divided up into multiple private entities - each owning pieces of our infrastructure - rather than forced to become a nonprofit or pseudo-governmental entity like the Postal Service.

As a result of these many decades of mistakes and lack of vision, we're paying a dear price to use and maintain these telecom and data networks now. This is an instance where MORE socialism, not less, would have served the Common Good far better than "competition" and a "free market".

Mark A. Craig | Aug 12, 2007 | 5:49PM

In Delhi (capital of India), you can get unlimited broadband service for one month for $17 a month.

Ramesh Patil | Aug 12, 2007 | 6:13PM

It's to bad for you all in US that you have such high cost for so slow broadband, here in Sweden the sheepest 100Mbit fiber costs about 30-35$. Myself I pay 50$ for 24/8Mbit via cable, adsl speeds are 20/3Mbit for 30$.

elias | Aug 12, 2007 | 6:26PM

We could take a cue from the transportation industry. *IF* there are dates that were put into law then by LAW they must do what they said they would do. It is called 'drag them into court'. We could compel them to either give up the money back to us or the government or both, or build the network they said they would.

elhech | Aug 12, 2007 | 7:14PM

By drag the transportation industry I mean what happened to the government a few years ago. The congress put hard dates into the law saying by date 'X' you will do something. In the transportations case it was change the rules of driving to make them safer. But in this case it is 'build a network that does speed Y'.

elhech | Aug 12, 2007 | 7:16PM

"And the upshot is that I could move to Japan and pay $14 per month for 100-megabit-per-second Internet service but I can't do that here and will probably never be able to."

No, Cringely, you couldn't. I will, once again, explain this to a writer who doesn't read Japanese and doesn't understand tech in Japan.

Those line speeds you see advertised in Japan? They never get to you. Those aren't the speeds you get; those are the speeds the fiber runs at. In truth, you don't even get close.

I have been through 3 providers here in Japan, and have spent a lot of time talking to the actual techs who have to come and try to service lines that aren't running as fast as they should be (which is all of them, but most people don't know how to check). They are usually openly furious at the marketing departments for making promises that the network just plain can't deliver.

Take my current situation. I have a 50M ADSL line. This costs me about $25/mo (I don't know where you get $14), sans provider. The ISP is another $25/mo. Okay, but $50 for 50M is still a deal, right? I mean, last time I was living in the states I was paying $40 for 4M, so how could I complain, even if it doesn't quite run at 50M? Well, because it runs at THREE Mbps. I know it would be faster if I were closer to the post (I'm 1.7km), but I have a hard time believing that I'm losing 94% of the speed over that mile of copper, and I also know that most people are in the 1 mile+ category. So who is getting 50Mbps? The network company. Nobody else.

But if you're talking about 100Mbps, you're probably talking about FTTH (fiber to the home), which is available in Japan. Last time I priced it (which was a few months ago), it was going to run about $70 a month with provider. Unfortunately, I was too far from the street to get it to my apartment. Most people living in apartments (i.e. most people in Japan) can't get fiber to their apartments. They can, if their landlord okays it and the network company deems it profitable based on interest, get "mansion type," which is a shared 100Mbps line to the building that is shared by all the residents. Of course, the network companies still advertise this as 100Mbps, even though you are getting a fraction of that, determined by how many of your neighbors are on and what they're doing. Add to this that the 100Mbps line, according to salespeople when you push them, has never been seen running more than 80, and among my friends who have it, never more than 60. A couple people getting 30. That being said, "mansion type" is quite cheap; something like $25/mo for the whole shebang, so it's a decent deal if you can convince your neighbors to call the network company (the SAME network company--there are 3 in my area) and your dinosaur landlord to allow the little network box to be attached the outside of the building, but I have been unsuccessful in this.

Basically, here are three rules of Japan to keep in mind in order to temper the hyperbole you hear from news outlets run by people who don't live in Japan and don't speak/read Japanese. These are going to run against your image of Japan, but believe me, they're true:

1) There are virtually no consumer rights in Japan. This means that companies routinely flat-out lie in advertisements and there is no recourse.

2) Japanese people are technologically backward. I'm serious. This is the biggest misconception outside of Japan. Just because Japanese companies produce a lot of technologically-advanced products (and anymore, actually they're just contracting China and Taiwan to do it) doesn't mean Japanese people have any idea how to use any of them. I am not kidding. Computer literacy is shocking. I teach university, and I have to teach my kids how to type and how to open/close windows and how to use a mouse. They don't have computers at home, and have only had one "information" class in high school, where they made a pie chart. And these are rich kids going to an expensive private university.

So there you have it. Don't believe the Japanese techno-hype. It's not bad over here, mind you; it's just not anywhere as good as people tend to think.

Kyle Armbruster | Aug 12, 2007 | 7:32PM

What the article misses is demographics, and more specifically land mass and people per square mile.



Where in japan you have 377,835 square kilometers, about the same as the state of montana... With a population in excess of 130 million. That's 344 people per square mile meaning a hundred thousand dollars worth of broadband cable can pull in up to five grand a month, paying for itself inside two years and being pure profit after.



TRY THAT IN MONTANTA where there's less than a million people resulting in about 2.5 people per square mile... That hundred thousand dollars worth of cable (and the labor/infrastructure to support it) MIGHT serve 10 people...



There's a reason a hefty chunk of the american west is still on dialup - NO SANE business is going to waste money on that.



Hell, the US overall has roughly 85 people per square mile - the actual cable costs money, the infrastructer costs money, the manpower to install it costs money... and the longer distance between people means less revenue for your investment costs.



OF COURSE IT'S MORE EXPENSIVE HERE... and if you took the time to understand the ACTUAL economics of it, you'd know why.



I live in a town with no cable TV - why is there no cable TV? It's a town of 500 with a land mass of 27 square miles... that is 20 miles of woods and no people away from the next nearest town. Even if every household in town got cable TV it's only three to five grand a month in revenue at the $40/mo rate - it's gonna cost them half a million to run a cable out here meaning hundreds of years to even break even!



It is nothing short of a miracle I'm able to get 3mbps/768kbps out here at $30/mo - and I'm ok with that and understand the concept that the middle of nowhere is going to cost more.



Sorry, but the article reeks of card stacking - presenting some facts while omitting others... and a definate lack of understanding about the economics of it.



If you are taking downtown Boston or New York - YES, then there's no malfing excuse. The american suburbs on the other hand? TRY AGAIN.

Jason Knight | Aug 12, 2007 | 8:58PM

No doubt there has been a lot of bad regulation. The solution is to deregulate, not to re-regulate. Read Adam Smith, F.A. Hayek, Milton Friedman, Thomas Sowell, etc. The free market, even with all its imperfections, is always more efficient and productive than any centrally-planned system. Period, end of story.

Michael Ellis | Aug 13, 2007 | 12:10AM

Amazing waste.

I work for a small independent ISP, and we do on occasion receive government funding. Recently we got $300k, to provide service to four tiny towns that would likely never turn a profit if we built out with our own money. These government grants do serve a purpose, as we can now provide 15Mbps microwave service to 6.000 people who could only get poor quality dial-up or satellite service before. They get better service than most big cities, and it never would have happened without federal funds.

We covered 6,000 people, in the middle of nowhere, for 300,000 dollars. That's $50 each. The total population of the US is about 300 million people, which at $50 each, would cost about $15 billion to cover. Not to mention that a majority of those 300 million live in large cities, which are much cheaper to cover per-capita.

For $200 billion, the entire US should be covered at least 13 times over!

What the hell?

ISP guy | Aug 13, 2007 | 12:18AM

On the subject of Japan (I live in Tokyo), I have not seen $12 for 100M. I believe that $12 gets you around 20Mbit which is still a very far cry from what's available in the US. Fiber costs around $80/month, but new apartments often come with it built in.



With regards to speed, I routinely pull down files at over 5MBytes/sec (40Mbit/sec). Although no one will ever see 100M (you can barely get than in lab conditions), I did pull down a file from the ultra fast ring servers at 9MBytes/sec which is as good as it's going to get.



I've had three different service providers, with comparable levels of performance in each case (USEN, Asahi-net and Minato-Cable).



Whenever I think of moving back to North America, broadband is one of the reasons against doing it. I use a *LOT* of bandwidth as part of my job and getting ISOs in less than 10 minutes is one heck of a lot more appealing than waiting the entire afternoon for them.



One final note to Jason: Isn't the flaw in your argument that, in the case of DSL, you don't actually need to run any new wires. It just uses regular phone lines which everyone already has. Presumably that's why half the world went DSL (and the other cable); so they could use existing infrastructure and avoid the cost of replacing it.



I can get 50Mbit DSL out here, and that has nothing to do with population density or running new wires. It has to do with putting in good equipment, scaling it to local demand, and upgrading it once in a while at the local CO.



For fiber you have a point, but not for DSL. America has a long, long way to go with the infrastructure it already has.

Neil | Aug 13, 2007 | 12:20AM

Trouble is without regulation, you get oligiopolies that screw the customer anyway. At least with regulation, there's a chance they are forced to deliver.
Regulations aren't bad, just that's there's too many idiots, gangsters, and cowboys involved.
When a market is not profitable for a large number of competitor, the free market soon becomes distorted and the gangsters reign.

Peter Bostock | Aug 13, 2007 | 12:26AM

I would have to agree. Deregulation is what made the airline industry more affordable and serviceable than it was while regulated. Granted that there were some losses, but as a whole we have a better airline system which offers affordable rates while retaining delivery base.

American's have become slack and desire to be spoonfed.

benjamin | Aug 13, 2007 | 12:27AM

Wow, this sounds sort of like Australia...

Alex Macaronis | Aug 13, 2007 | 12:32AM

"airlines ... serviceable"

LMAO

Nearly all the US airlines have been in, are in, or have flirted with bankruptcy, the service has gone to hell in so many ways, the spoke/hub system has created regional monopolies and reduced competition on many routes.

satx | Aug 13, 2007 | 12:38AM

@Michael Ellis:

Deregulate? More?? WTF? Do you also think we need *less* regulation of the credit market too? How many children will have to lose their family homes on parents' subprime mortgages before we experience the alleged "glory" of the self-correcting, efficient and productive free market?

I'd been all about those laissez-faire principles in my 90's-excess college youth. But as a maturing father of grade-schoolers in this accountability-free "world economy", you bet your arse those "imperfections" won't work as an excuse as to why Johnny America can't get a warm lunch or soft bed.

Smith, Hayek, Friedman and Sowell forgot the fundamental truths: (a) governments are ipso facto players of the free market, and (b) some things are more important than a free market.

Period, end of story.

Fred Snertz | Aug 13, 2007 | 12:39AM

Neil, you are somewhat wrong about DSL. It is distance limited, and wire-quality limited. The same thing goes for cable. In many cases, to get better speeds (or any service, for that matter), the wires do need to be upgraded.

For many cases though, you are correct. The LECs often just need to drop DSLAMs in the CO (and other locations where copper is bridged to fiber).

I am obviously biased (this stuff is my job), but I really think microwave is the way to go. The delivery medium is the air, and the POPs can be just about anywhere. It's much faster and cheaper to install, trivial to upgrade, can be built from inexpensive parts (slightly modified 802.11a works great), and can cover far more people per dollar invested. Even speed is usually not a problem, we get about 100 10-15Mbps customers per 30Mbps sector. That puts it at about 65/1 oversell, but it's rare for them to peak for long, and rarer still to get complaints.

ISP guy | Aug 13, 2007 | 12:45AM

Whether Cringely is right or wrong, don't know.

But I probably have one of the most interesting observations.

I live in the borderland here in El Paso, Texas. I pay $45 a month for cable internet service and $60 a month for 700 minutes of cell phone service. That's $105 per month. How is it that the MANY of my friends in Juarez, Mexico (a third world city) pay $20 - $40 per month for both services with the same profile?

Meditate on that for a while... and don't make comments about associated costs, El Paso is a mecca for cheap labor.

TB | Aug 13, 2007 | 1:05AM

Every time more layers of "corporate socialism" are added at a federal, state, or local level, restricting capitalist free market activities under the cover of "Protecting the public" they call it "deregulation". It gives capitalism a bad name. I may move overseas solely to get bidirectional 10MB/sec connections or better.

eris23 | Aug 13, 2007 | 1:21AM

Bob Cringely's comments are very valid. This is just one more example of the fall in the standards of excellence that the US was once famous for. This fall is not only exists in telecoms but in transport infrastructure and areas of economics and finance. Take a look at this article:

http://www.news.com.au/business/story/0,23636,22234638-462,00.html and you will see what I mean.

Are we seeing the beginning of end of the American superpower?

rogera | Aug 13, 2007 | 1:34AM

I think the word you are looking for is fascism.

No Sympathy For The Ignorant

Beam me up scotty . . .

Ivanhoe | Aug 13, 2007 | 1:38AM

Cost of living have to be factored in here. We pay more for everything else in US than in Mexico, so why not broadband? What we need is a cost comparison adjusted for cost of living.



BTW, can we please stop propagating this misconception that the delivery medium of microwave is air? Microwave doesn't need air to transmit. In reality, air impedes the transmission of microwave.

Frank | Aug 13, 2007 | 1:43AM

$14 for 100 mbit access in Japan? That's outrageous! I work for a Swedish ISP and our best offer if you connect a multi-apartment house is about ... $20 for 100 mbit. This is made possible through continuous infrastructure investments during the late nineties and early noughties (often made at a loss in the heyday of the internet boom).

Emil | Aug 13, 2007 | 4:29AM

This is what has happened in about every service based industry in America. Guess it isn't such a good idea to idolize corporate executives when they return massive profits achieved by any means necessary. Yet we expect them to be sympathetic to the ones who paid for those profits. Funny creatures we Americans... I'll go ahead and throw out the much revered, but never accomplished, battle cry: BOYCOTT!

Mike | Aug 13, 2007 | 8:09AM

It's all a matter of incentives. The Telco’s incentive is to maximize profits and stay in business. With interference from the government (i.e., regulation of the industry), there is little or no meaningful competition; the government has taken care of the "staying in business" part of the equation.



I would suggest the federal government cite the commerce clause of the Constitution and forbid any state or local regulations of the telecommunications industry. The Feds should then allow any company to offer any service in this realm (tiered, pay per use, etc) over any means (copper, coax, fiber, power lines, wireless). That is, enable real competition.



Oh, and just say "no" to "net neutrality".

Joe | Aug 13, 2007 | 8:35AM

geez...verzion is ripping off it's customers? wow! i would never expect a large multibillion dollar corporation to try that.

i have long wondered why we even have long distance anymore. i switched to vonage 3 years ago and they seem to get by just fine for 25/mo vs. verizons prison rape style bills.

corporate greed is constantly worsening and this story is another on the large pile of examples.

aaron | Aug 13, 2007 | 9:11AM

geez...verzion is ripping off it's customers? wow! i would never expect a large multibillion dollar corporation to try that.

i have long wondered why we even have long distance anymore. i switched to vonage 3 years ago and they seem to get by just fine for 25/mo vs. verizons prison rape style bills.

corporate greed is constantly worsening and this story is another on the large pile of examples.

aaron | Aug 13, 2007 | 9:11AM

Yet another story of how the telcos screwed us over that pretty much anyone that read wikipedia can write, the real article is how can we solve this problem and move forward?

James | Aug 13, 2007 | 9:13AM

Huh? The real article is one where we find out that those responsible for this criminal activity are singled out and prosecuted - including the complicit regulators. Solve the problem? Move forward? That seems to be moot at this point. I think the only way that will ever happen is if the FCC gets out of the pockets of the Telcos, out of the business of censorship, and back into the business of protecting consumers from unfair and criminal business practices. Shyeah. As if.

James (the real one) | Aug 13, 2007 | 9:29AM

In your narrow focus, you overlook other market and regulatory forces in play at the time, e.g.,

- the Worldcom and Bernie Ebbers business model that operated at a loss, while other companies scrambled to meet those unrealistic pricing models.

- the expenditure of energy and monies to help start-up competitors learn how to do business and the requirements to provide central office space to those competitors.

- the need to satisfy Wall Street's expectations to enable the business to provide a ROI to attract investors.

I attended forums and meetings in the 1990s where I heard consultants (a dirty word), entrepreneurs, and some downright charletans expound on the brave new world of telecommunications.

Now, we see the results - including the US West financial debacle.

No one had a crystal ball, no one was omniscient, and you didn't get rich, so you are bad mouthing those who managed their companies to do the best for their stakeholders in a time of great turmoil.

I have no great love for the executives of the RBOCS. I saw failures and missteps on their part, but their companies survived, which was their ultimate responsibility.


John | Aug 13, 2007 | 9:42AM

John,

Your wrong, its fraud, plain and simple fraud. And to paint this as anything else is lunacy. These RBOC's took and still take billions of tax dollars to develop a digital infrastructure that at a minimum would provide a base for competitive playing field.

Instead, they lied, the cheated, and they greased the pockets of the FCC, State governments and our congress. They promised technological advances, and did not even make a half heart attempt.

Now, are we ever going to see that money again, nope. Should we punish these offenders so that they never do again, Yes. Just like the bank robber or the car thief, these companies need to be punished, and the penalty should be appropriate to the crime. What the punishment should be, I have some ideas as do most people.

Jim

James | Aug 13, 2007 | 10:04AM

FIOS comes out in your area this all ends. By the way everything with established corporations are more expensive. Why? They need to make tons of money to pay over inflated P&L statements and executives' bonuses. That is why Lingo, Vonage and the other VOIP are killing regular phone service and to some degree Mobile service if every open WII gets going who needs to pay for phone service their bread and butter. FIOS comes in or other equivalent game over. No need for TV, can stream it, no need for land line phone serice, SKYPE or some other free internet phone. What's left to pay for then? Hook up to neighbors WII with FIO, people pool their resources etc.

Oh well my heart bleeds for the American(yeah right) corporations, outsource the jobs, eliminate local industry, and what will you have left? You figure it out, no product, no innovation, no future.

But, with soaring oil, energy costs, transportation, inflated penny on the dollar currency, comes, local comtrol of industry, small communities banding together and de-centralization. Village cottage industry again, local products for local people, WAL-MART folds, big industry goes bankrupt and goes overseas, stock market crashes, dollar melts down. We are left on our own, gee not so bad, we have to work locally and together. Oh well it's comming but maybe now we can band together for the common good. Other than have old dying and bloated Corporations telling us what to do.

janclairmont | Aug 13, 2007 | 10:09AM

This is the problem with giving incentives before getting results. There's a huge difference between giving someone money upfront to do something and promising to give them money after they reach certain performance goals. If you're just handing out money at the start, what incentive do they have to actually deliver if you're too lazy to hold them to your standards?

Howard | Aug 13, 2007 | 10:17AM

Well, we have our own American version of communism. It is hidden under "Publicly Traded Company" concept. Shareholders own the company but the management owns the money. Without the real ownership there is no responsibility and accountability. Telecommunication giants were in the center of the DotCom market failure. We shouldn’t be surprised and should start looking for a long term solution. The first steps are in process through reverse public offering (privatization) of many companies. The next should be criminal investigation at Stock Exchange and pressure for IRS investigation targeting top “earners” from CEO and Board of Directors circle of “Publicly Traded”. Even the American economy will not survive present level of fraud and nepotism going forward.

Zbigniew | Aug 13, 2007 | 11:00AM

It's about time you wrote this article!

joe | Aug 13, 2007 | 11:17AM

Simple:

Republican Congress for the Financial Benefit of Republicans.

William | Aug 13, 2007 | 11:19AM

"Where are we going and what am I doing in this handbasket?" It´s all downhill from here!
Roy...

Roy | Aug 13, 2007 | 11:29AM

It's foolish to expect the gov't to regulate the industry, when the industry lobbyists are controlling the gov't. But we Americans keep expecting our government to work miracles, and every time we're proven wrong, we blame the other party.

Mark | Aug 13, 2007 | 11:35AM

No surprises there... let's see, quickly off the top of my head, some telling stats, in no particular order...
- illegal war in Iraq costing thousands of our soldier's lives, hundreds of thousands of Iraqi lives, billions of dollars, and ensuring a new generation of terrorists
- 1 in 5 kids in the US lives in poverty
- 1 trillion dollars over the last 30 years or so for a drug war with no positive effects (to say the least, considering the millions of people arrested and incarcerated, families destroyed, for what most people who think for themselves consider are not crimes)

why? profits for...
- defense (war) industry
- oil (pollution) industry
- pharmaceutical ('legal' drug) industry
- tobacco (400,000 deaths/year), alcohol industry
- health (sickness) insurance

all enabled by our 'democracy'.

i'd say it sounds like business as usual.

Jean-Philippe | Aug 13, 2007 | 11:42AM

The issue at hand is not that these companies exploited the system, but that an inherently flawed system exists to be exploited. Corporations are not inherently evil - but they are economizing and utility maximizing and if money is to be made through rent-seeking, the process of petitioning government for subsidies, any corporation will logically lobby for those subsidies. If you want better broadband, the Federal government must stop offering subsidies to companies and effectively force them to become competitive to survive - we don't need more regulation, we need less. If you want to continue getting less bandwidth for more money, by all means, keep government in the game; however, it's not going to have the effect you hope: companies need to constantly prove they are in dire straits or at least inadequate in one way, shape, or form in order to effectively rent-seek - and they'll continue to do this by providing inadequate service. If you want phatter pipes, be prepared to take a hands-off approach - it may seem unfeasible and downright dangerous to some, but personally it sounds better to me than a bunch of power-hungry, inefficient, and self-serving politicians and bureaucrats plunging their hooks any deeper into the heart of telecommunications than they already have. Yes, corporations are also self-serving, but we still (in most cases, unless government has granted monopoly rights to a provider) have a choice as to which corporation we contract to provide us with telecom services, providing them with behavioral check that is more often than not sufficient to prevent them from downright shirking the consumer - we don't have that luxury with the monopoly over coercive force that is the U.S. Government.

Jordan C. Kleinsmith | Aug 13, 2007 | 11:45AM

Yawn. All part of our government of, by, and for the corporations.

David Brown | Aug 13, 2007 | 11:46AM

The technology at the core of this "revolution" was Bell Labs' Wavelan architecture using WDM routers. When Bell Labs was transferred to Lucent Technologies, management bet the ranch on switched networks. And why not? Most were old AT&T hands or clueless hacks hired in to give the company a sporty image for investors. Unfortunately, the switched networks that served so well in the 20th century were not going to extend into the IP-dominated networks of the 21st century. It's tough to push a rope, even when you're Bell Labs. The coup de gras was the evisceration of Bell Labs by Lucent CEOs Rich McGinn and Pat Russo. Now we have no technical leadership, no political leadership, and 50 states with different regulation regimes and goals. Can you say clusterf__k? I knew you could.

Jerry T | Aug 13, 2007 | 11:57AM

The need to physically connect a system of wires to each location is a very strong barrier to competition, especially where too many wires will collapse the existing telephone poles, and where the wires all carry effectively the same thing. Seems like a simple enough task to lay the wires, whether done by local governments, private companies under local contract, or regulated industries.

The expense of laying or hanging wires is a real bottleneck in the distribution process that discourages open competition. If local coffeeshops can't compete with Starbucks, how can we expect competition in the telephone industry? That's the promise of broadband wireless -- it will let smaller players enter the game.

That being said, some industries may be just too big to regulate effectively -- phones, oil and gas, other transportation. Too often, the regulatees can afford too many lobbyists and, through them, too much political "activity".

Kirk Becker | Aug 13, 2007 | 12:10PM

John,



Quote:


I have no great love for the executives of the RBOCS. I saw failures and missteps on their part, but their companies survived, which was their ultimate responsibility.


Response:


I have a great deal of trouble accepting that a company's 'ultimate responsibility' is to simply ti survive. But be that as it may, I think that inherent to that should be a responsibility to obey the laws that govern them and meet their contractual obligations; neither of which they managed from the sounds of it. 'Turbulent times' is an excuse that is used to whitewash far too much. And, really, I don't care much what Wall Street expected out of them -- there's a lot of financial shenanigans that go on for that reason, and it's high time that kind of reasoning was investigated by federal authorities.


Which isn't to say that there isn't another side to this problem: namely the incredibly poor oversight. But then this always seems to happen when you put people who understand 1970's technology in charge of overseeing the regulation of 21st century technology. Why is it the right technical people are either never available to the decision makers, or simply not listened to?

Andrew | Aug 13, 2007 | 12:24PM

Why can't we have some nice class action suites over this? You would think that there would be some easy ways of proving fraud with many of these baby bells. We could have a national organized effort that could better organize efforts on the state level. We could hire Cringely to help explain this to a jury.

Rick Rudge | Aug 13, 2007 | 12:40PM

Why doesn't this surprise me?

jim welniak | Aug 13, 2007 | 1:38PM

I call it the North American premium. IE; North America makes more money per capita so big business finds ways to take more per capita.

If only N.A. was working for $5 per hour, then the telecoms would find ways to offer you service cheaper.

Simply put; N.A. can afford it.

If you want to pay less for utilities, go to WalMart and help the economy flop.

kam spam | Aug 13, 2007 | 1:39PM

Even the Information Supper Highway into schools really isn’t all that it was supposed to be. I worked for a school system in the state of California. Quite a few years ago the County School administration got supplied an OC3 into the main office, a wonderful thing. But the last mile has never been implemented. The cost was just way to prohibitive. Now most those schools have cable modems supplied by the local cable system as a public service, beats the shared T1 that was used before but far less than the promise.

Mick G | Aug 13, 2007 | 2:45PM

Mmmm...maybe this explains why its so difficult to get regular old DSL in my neighborhood...or maybe it doesn't.

Apparently BellSouth (now AT&T) has so few DSL connections available in my neighborhood, that you have to wait until someone drops service before you can get connected.

And yet I keep getting the $19.95 DSL ads in my mailbox every month.

Vern | Aug 13, 2007 | 2:50PM

So how do I fix it? How do I get 100 mps network service for $14 / month? Anyone?

JG | Aug 13, 2007 | 2:59PM

The beauty of all this lies in the mentality of the businessman of today. The U.S. market ripe for swindle at the expense of infrastructure combined with the ignorance of the average consumer makes this cycle UNSTOPABLE. People buy what you tell them to buy. Use the resource up before the competitor can,then downsize and move on. The United States is well on it's way to becoming the new third world and no one cares until we run out of parking, gas and cheap food. Mass media distraction will always be available...

swifty morgan | Aug 13, 2007 | 3:14PM

Move to Japan. They know english better than many Americans.

Nader | Aug 13, 2007 | 3:34PM

This posting has numerous errors, or at least numerous claims with no backing. None of the states or DC “Contracted” with telecom utilities to build out fiber. I am not aware of any tax credits given by states or feds, surely none that equaled 2K per subscriber. Nor do I think that got acclerated depreciation. Also, Japanese 100 mbs is not 14 a month. Its 40$. (hear it from a Japanese telecom official: http://www.itif.org/index.php?id=38)

Also, the FCC doesn't say we have highest deployment rate. They also didn’t redefine BB as 200kbs. Its always been that speed.

rob | Aug 13, 2007 | 3:41PM

And buggy whips have always been the way we regulate the speed of our personal modes of transportation...

$40 a month for 100mbps, that is just simply outrageous, especially when I only pay $52 for 6mbps..... and a cap ....

Ron | Aug 13, 2007 | 4:21PM

If you think the US is bad - try the UK! Again, it all started out well enough and one hoped that the net would become ubiquitous - but now that the S&M (Sales + Marketing) gang are wagging the dog - it's going to hell in a handcart!

There's idiot politicians witterng on about the "lawlessness of the Internet" while the average consumer is subjected to appalling and in general contract breaching service and joke support lines. Straightforward fraud is an almost everyday occurrence. Think cellular call plans on acid. The regulators couldn't find their own rear ends with both hands in a darkened room.

We have unbridled greed too, spiced up with a manipulation of the term "bandwidth" that would have you paying per individual electron. An incumbent monopoly (BT) that's royally screwing it's wholesale customers to massage it's own retail position.

It's a essentially a clear, if uncoordinated move by the telco(s) to not do any actual telecoms work and to wring/extort the maximum cash from customers by fair means or foul. The sort of thing that gives profiteering a bad name..... /rant off

Tom Oliva | Aug 13, 2007 | 6:50PM

Uh, yea,

Never mind all the dark fiber left in the ground to rot under the promise of Municipality wide networks. The repeated promise to college students that access to campus computers would become available over special cable TV boxes, finally becoming reality as a result of wide spread internet demand.


Almost 20 years later I finally have Fiber-To-The-Home delivering Cable-TV, Internet, and Telephone. Only reason I have this reality is the local Cable-TV operator dropped the ball, by continuing to charge top dollar for lack luster service, allowing Verizon to come in and offer better service for less money.

I don't think that Verizon is deploying their fiber network for the benefit of the consumers, I believe what Bob has said in the past, that it is more a question of access to the customers. The equal access rules allow companies that invest in new infrastructure more control over how they allow the new infrastructure to be used by other CLEC's.

Exo

Exothermicus | Aug 13, 2007 | 7:24PM

I get queasy every month when my obscene T1 bills come in at work. At home, I get roughly 10x the bandwidth for 1/10th the cost and I still think Comcast is overcharging me.

Keith Alioto | Aug 13, 2007 | 8:00PM

To Michael Pemberton,

That's interesting as I have just been upgraded by Optus to Optus Direct with a $30(AU) reduction in monthly cost and no longer require a telephone service to keep my broadband. They even threw in some new filters for free (for the different type of DSLAM) and a VOIP handset for a nominal cost of $20AU if I would like to go that way. I am, however, going to stay with using the mobile (cell to our US friends) for talking. Far cheaper with some of the pre-paid deals now available, and I'm not talking about DoDo (urrg)!

Then again I live in the NE suburbs of Adelaide, sunny South Australia, much better (and cheaper) than on the eastern seaboard IMO.

Robert (NOT Cringley) | Aug 13, 2007 | 10:02PM

The only real choice left to have real broadband in a reasonable amount of time is to create local efforts and build it out ourselves and gradually build these systems together - in effect to cut the greedy commercial players and corrupt government creeps out of the middle of the system. So support making it legal again to provide community efforts. We should have the right to do it ourselves.

MikeFM | Aug 13, 2007 | 10:52PM

1994... I believe that was a Democratic President, wasn't it? Hmmmm... the name escapes me at the moment...

Amazingly, Cringely only names the Bush administration, who didn't take office until SIX YEARS LATER when the deadline was already passed.

I just can't believe how brazen liberals are some times.

eep op ork | Aug 13, 2007 | 11:28PM

A lot of people want to know what they can do about this mess. How to get real broadband and get it for cheaper.

Back municipal fiber plans...Broadband will never be organized and priced like a utility in this country until you do. (You want a broadband network that is organized to benefit customers? You want that on the lowest possible price? You want a public utility.)

Become local political activists.

Put together a team of smart, patient, people who are willing to work and push municipal broadband for your community. Get them to promote the idea in development forums, local chamber meetings and such...

Back politicians who promise to build a muni fiber network. Work for their campaign. Build them websites. Knock on doors. Sweat.

Get on the local study group. Push hard.

When it becomes a real issue locally fight hard to counter the inevitable lies of the incumbents. Start a local grassroots political organization if it goes to referendum and be utterly relentless.

It can be done. We did it in Lafayette, La.

John | Aug 14, 2007 | 1:02AM

There was a liberal in the white house but it was a conservative controlled congress (remember the "Contract with America"?). btw the bill was passed in 1996, not 1994 eep op.

But this isn't a politcal tale, its a tale of corporate greed and lack of oversight.

Craig | Aug 14, 2007 | 4:13AM

Before the mid-1900s (pre-Internet/analog era) there was a link between the growth of the economy and telecom spending. As a student of economics I was fascinated by this correlation. Today with the economics of digital destroying that correlation something as to replace this barometer of the economy. But what can replace this measuring stick? My guess would be calculation formula which can only be measured when sufficient broadband is available anytime and anywhere.

As an entrepreneur I can imagine what the explosion of services that a nationwide true broadband service would bring. I believe the only way we will truly see a broadband future is when the clout of the tech industry out weights the clout of the telecom industry. When the likes of Intel, IBM, Microsoft, Google and all the rest realize that they can't standby and watch as the country and their revenue slows because of lack of affordable broadband. Let's hope that happens soon.

Terry | Aug 14, 2007 | 8:59AM

I live on the souteast side of Lakeland, Fl. and all that is available to me through the telephone company is dial - up. There is still no DSL available in my area. I can not view videos unless I buy cable internet service. Verizon tells me that they are putting in a fiber optic network - but not in my area. If it exixts here at all - it is in new housing developements. I have not seen any ads from new housing developements stating that there is fiber optic service available - so I would have to take Verizon's word for that !
There is only one cable company in my area which is Brighthouse. All my neighbors that want faster internet service are paying thru the nose for it by getting rr. (road runner) through Brighthouse. I don't have cable tv and refuse to buy it - so getting cable internet service is not an option. I am already lining the pockets of Verizon - which by the way - increased their rates again.
Personally - I feel like I am Internet challanged !!!

Debbi | Aug 14, 2007 | 2:31PM

The real problem here is our two-party system. On one side we have the Republicans backed by big business, on the other we have the Democrats backed by trade unions. That covers the interests of the very wealthy and the blue collar but leaves out a huge segment of the population. What we need is a consumerist party with our own lobbying efforts and paid politicians.

Someone earlier commented on how he expects anti-business comments from PBS hosted forum. I would argue that we aren't anti-business, but pro-consumer. When it comes to monopolies, that pits us against business. For that matter, we can be anti-union as well.

Andy | Aug 14, 2007 | 5:24PM

It will continue this way as long as the telco's are in charge, why is anyone surprised? For instance, back in 2000 I tried installing covad dsl. Verizon told them I could only qualify for 144k idsl, then installed a 1.5adsl for me the next week themselves. The following week they still told covad I was in an area too slow for anything past 144k yet I had a 1.5 meg up and running. Bottom line, it might look like the telco's have competition, but when they are able to block the competitor, they win. Be it ilec/clec/etc someone is always dependant on the telco. Even if you have say Charter.com cable, you are on a att backbone.

Arthur | Aug 14, 2007 | 10:20PM

Debbi from Lakeland - I live in Northwest Lakeand (the poorer side of town) and you are able to get Roadrunner internet service without having to subscribe to the cable service. Roadrunner light is about $20/month. I watch network programs from the major network websites pretty regularly. Roadrunner light is plenty fast enough to playback those videos and they are pretty good quality. Lost looks great and plays back full-screen without any hiccups.

Re the article - It looks like our progress has come to a halt, at least for now. Once Verizon has more fiber to the home, will that increase competition enough to increase speed or lower prices? What about broadband over power lines? Is that still making any progress? What about broadband over the TV spectrum that will be released after 2009? Will that increase competition enough to spur innovation?

Ryan | Aug 15, 2007 | 9:57AM

What the hell is an ROBC?

DB | Aug 15, 2007 | 4:11PM

Oh yeah, a Regional Bell Operating Companies

DB | Aug 15, 2007 | 4:12PM

I read the ebook you mentioned some months ago. I always knew that the RBOCs were evil. It just that way every time I had to deal with them. That what drove me to Asterisk and ITSPs over land lines. My IP is provided by one of the last standing CLECs (Covad) because it makes me ill to think of paying AT&T for anything...and there just aren't any other options.


Cable is a non-starter simply because of the idiots they pass off as installers who want to mess with my home network. I have >40 devices on my lan. No gorilla with a drill is touching my network.


I pays about double the going rate for AT&T DSL or Comcast cable modem just to deal with a company that respects me, and lets me do what I want with my end of the connection. Don't get me wrong...I LOVE Covad! Every time I call their tech support I get a bright, educated person who can really do something to help me...not a monkey with a script.


I've joined numerous online groups to lobby the feds into action...to no avail.


Here's the problem though...like in all aspects of this democracy...people need to expect more. Don't let every M&A go by unexamined. Kick FCC butt! If they won't listen then lets petition the FTC!


There's not enough rage in the process to ensure change.


That's what it takes.

Now I need a drink ;-)

Michael Graves | Aug 15, 2007 | 9:35PM

I've worked for Telstra fairly recently (at the product architecture level) and I think this problem may be self-correcting to some extent.

Anytime a market sector (not just telcos) has priced themselves above any useful value they deliver, some other arrangement arrives to supplant it.

In this case, the thing that has Telstra running scared is the rise of municipal WiFi. Think about it -- you end up with something approaching Internet connectivity at a cost of ...um, clamping a few wireless repeaters to existing street lamp poles.

Considering this is something even small communities can do on the cheap, the local municipal WiFi clouds can only grow and will eventually merge.

At that point the Telcos will no longer be able to recover lost ground, and will reduced to the revenue stream of their last mile copper, which is serving a diminishing stream of traffic as more action is directed toward the razor-thin margins of cellular services.

My advice? Dump your telco stock. Their assets won't be worth a brass razoo in five years.

Nefarious Wheel | Aug 16, 2007 | 3:17AM

I'm surprised that Bob focuses so much on wired access instead of wireless.

I'm sure it won't be cheap, but wireless is the next big thing coming for broadband access.

Bill | Aug 16, 2007 | 2:00PM

> In this case, the thing that has Telstra running scared is the rise of municipal WiFi.

> Think about it -- you end up with something approaching Internet connectivity at a cost

> of ...um, clamping a few wireless repeaters to
existing street lamp poles.

Yes, because there is an infinite amount of bandwidth in the air and no interference issues to worry about, especially once millions of transmitters are all blindly spewing radio noise in all directions. With Internet becoming more and more of a necessity I'm sure no one will mind that it's down or slow more often than not and that it is impossible to trouble-shoot or repair intermittent noise issues. 'Free Municipal WiFi for all' is just the next wave of scavengers looking to rake in whatever government funding they can becomes obvious how flawed the design is.

Pete | Aug 17, 2007 | 11:01AM

@Jason Knight

Of course it is going to be expensive, that is why the government paid $200 billion to the cable companies to do it. If they were investing their own money then your arguments hold ok, but they weren't, they were given a LOT of taxpayer money to provide this service and have produced nothing in return.

Eamonn | Aug 17, 2007 | 12:07PM

"Bill Moyers is my hero."

OH_OH.

U NO HOO | Aug 17, 2007 | 12:31PM

While the US does have a fairly high connection rate per household, let's remember most folks aren't living online at home, as I have to for my job. Kids don't care as long as the World of Warquest and 2nd Life are reasonably smooth. Older kids spend more time on their cell phones than at their PC's. Not enough of them realize how cool web-surfing from your phone could be if there were true 3G speeds or faster available everywhere.

At work, only the datacenter operations guys really know how slow things are.

In 2000, we moved to a rural area only 26 miles west of Providence, RI. For a year, I lived with 56 Kbps dial-up (usually at 44K or less). I practically cried and bought dinner for the Cox Cable technician that installed "high-speed" internet service for me on Christmas Eve of 2001. Being on cable, and in a rural area, my DSL buddies are stunned at my performance.

Then I started traveling to Asia Pacific and EMEA regularly. When I come home, it feels like I'm back at 56K.

We're not up in arms because we can't miss what we don't have, and we love what little we've got.

John | Aug 17, 2007 | 2:49PM

"President Bush has set a goal of having broadband available to every U.S. home by the end of this year. What have these guys been smoking? Nothing, actually, they simply redefined 'broadband' as any Internet service with a download speed of 200 kilobits per second or better."

And in true Bush fashion, that's already "Mission Accomplished". When I look in the FCC database that details "broadband" availability, I find my home is served by two providers - Hughes and Wild Blue. Like everyone in the continental US...

I pay about $100/mo. for 128K ISDN, which gives me much better response times than satellite, and an effective throughput equal to the "FAP" limit of the typical consumer satellite plan.

If I could get backhaul, I'd start a local ISP. The "last mile" is not the problem, wireless is cheap. Backhaul is the problem - monopolized by the huge telecom firms. 1.5Mb/S costs $700/mo. here!

Loren Amelang | Aug 17, 2007 | 4:21PM

NetLinx will make all existing internet service obsolete.

http://www.safehaven.com/article-7538.htm

http://www.meshlinx.com

cloudsandskye | Aug 18, 2007 | 1:07AM

Meshlinx? Wireless mesh systems have tried and failed before, so from the outset one should be a bit wary of any breakthrough claims. Especially any mesh that claims that they can use standard 802.11b/g CPEs.

Where can I find more information on their technology? No, that investor-magnet posh piece doesn't qualify. And a website that contains gobbledygook like "Both the CPE and the DHCP service will act as an IP address" doesn't exactly instill confidence.

LarsG | Aug 19, 2007 | 6:37PM

Meshlinx? Wireless mesh systems have tried and failed before, so from the outset one should be a bit wary of any breakthrough claims. Especially any mesh that claims that they can use standard 802.11b/g CPEs.

Where can I find more information on their technology? No, that investor-magnet posh piece doesn't qualify. And a website that contains gobbledygook like "Both the CPE and the DHCP service will act as an IP address" doesn't exactly instill confidence.

LarsG | Aug 19, 2007 | 6:37PM

America is the only country in the world where BRIBERY is legalized and stupidly called lobbying. This internet rip-off is a direct result of lobbying. US media always talk of corruption in other countries, but rarely mention the deepest institutionalized corruption between US corporations and the government.
Thanks to the 2 stolen elections by Bush and his gang of thieves, that corruption is now a well-accepted mantra on how to run the country. Welcome to an empire that is destroying itself from within.

Theo | Aug 20, 2007 | 3:57AM

This seems like a clear example in which government should interfere more, and more effectively, to encourage a superior economic outcome for all of America.

Bob, Thanks for these great writeups. They answered what was for me a longstanding question about our telecom industries. Can you do the same for my other longstanding enigma: Why did the US lose its cellular leadership? Those same countries that beat us at broadband have more advanced cell phone networks and a plethora of accompanying mobile apps and services that we lack.

Will C | Aug 20, 2007 | 10:11PM

Your articles are dependably interesting and informative. As one comment said, we need more federal regulation. Knowing this, the companies make sure that regulators are emasculated. (P.S. I'm writing from a state that PAID Google to put in a data center that it MUST and WOULD put in anyway, as you explained earlier.)

Uncle Dave | Aug 24, 2007 | 9:15AM