Research - Education - Public Interest



The Broadband Challenge:

Consumer Protection in a Deregulated Digital Age

Nicholas Johnson(

February 2010

Seemingly, every major American institution has a stake, and a voice, in the current efforts to extend the Internet, a basic element of any industrialized nation’s infrastructure, throughout the United States. As of 2010 this effort included, among other things, the Obama Administration’s allocation of $7.4 billion in stimulus funds to bring broadband (faster) Internet access “to poor and rural areas that have been overlooked by Internet service providers.”[i]

In fact, the only stakeholder groups not represented around the table are the nation’s largest, those made up of the ones who will pay much of the bill: broadband consumers, whether families or small businesses, and in all probability state and federal taxpayers.

There is presently no consumer representation, or regulation on consumers behalf, within municipal, state or federal governments. The provision, servicing, and pricing of the Internet, this most recent and basic addition to America’s infrastructure networks,[ii] is for most consumers left to either their local phone or cable television company[iii] – and such grace, or greed, as it may exhibit.

This paper begins with a range of issues surrounding the expansion of America’s broadband networks, but then primarily focuses on some fundamental concerns regarding pricing and other aspects of consumer protection.

Broadband Promotion: Issues Overview

Do Americans lack Internet access, or is this a solution in search of a problem?

Normally those who care about public policy – legislators, executive branch officials, academics, and the policy wonks in think tanks – don’t concern themselves with the marketplace supply of goods and services unless they perceive a problem.

The FCC reports, “78 percent of adults are Internet users, whether that means broadband, dial-up, access from home or access from someplace other than home.”[iv] (Even the poor have adoption rates over half that percentage.[v]) So what’s the problem regarding Internet access?

The federal government, military, major research universities, Fortune 500 corporations, and America’s richest 25 percent of the population in urban centers, seem able to buy, build or invent about as much broadband speed as they need or want.[vi]

Small businesses and families in most major urban areas have a choice of high-speed Internet service providers, free wireless access hot spots in many public and commercial locations and, for those who cannot afford the cost of computers and commercial access, free connection from public libraries and high schools (for which federal funding sources have been available[vii]).

Nonetheless, a number of Americans do not regularly use the Internet. Who are they? Among those for whom Internet service is available, some find the cost, at $50-to-$100-a-month-for-life (often bundling Internet access with phone service and cable television),[viii] “too expensive.”[ix] Others, including those who could afford it, either do not see the positive value of the service, or identify what they consider its negative impact, such as the nuisance of unwanted email, the possibility of identity theft, and the prevalence of pornography and other risks to children.[x]

Finally, some four percent of Americans do not have ready access to a telephone or cable television company broadband provider[xi] – or, because of their distance from a provider, would need to pay exorbitant multiples of the usual charges for the service.[xii] However, even for them there are options.

Anyone with a landline phone can get some form of “Internet access” – albeit at the dial-up rather than broadband speeds most individuals would find unacceptable in 2010 for anything other than email. Cell phones, however, are another matter. Smart phones are already in use for Internet access. Indeed, the cell phone networks and towers may become many individuals’ preferred platform for Internet connection.[xiii] Line-of-sight point-to-point microwave is available in some rural areas for relatively fast broadband connection. Wi-Max technology can put a wireless Internet access signal over some of America’s smaller communities. Satellite delivery is always a possibility for the most remote areas. And storage capacity is now so large and cheap that some remote third world villages can be provided a significant proportion of the Internet content most relevant to them on a hard drive, thereby eliminating the need for any telecommunications connection and charges.[xiv] That’s another option for remote communities and schools in this country as well.

How fast is fast enough?

Given the widespread availability of one form of Internet access or another, the primary issue is really one of broadband speed, a subject discussed more thoroughly below. (Speed is measured in bits per second; a “mega bit” is one million bits per second, abbreviated “mbps.”[xv])

The FCC once defined broadband as 0.2 mbps. Now a low-end service from Mediacom is 3.0 mbps (15 times that early definition), and Google is offering a 1,000 mbps service in trial locations.[xvi] For most families and small businesses, a 3.0 mbps service is fully adequate for email, Web page access, and even downloading of many feature films and large computer programs. The consumer demand for speeds in excess of that in 2010 is primarily limited to those, for example, who play real time, multi-player, online video games with high definition video quality for which 50 mbps may be necessary.

It is reasonable to assume that consumer demand for faster speeds will increase over time, to 100 mbps and ultimately more.[xvii] The question that presents is whether there would be a financial savings to wiring the country with that capacity now rather than later.

In fact, we already have it. That is to say, most of the so-called broadband middle-mile (from the national and regional backbone to individual communities)[xviii] is already in the form of very high capacity, high-speed optic fiber. Thus, any Iowa town served by the telephone company Qwest, or the cable television company Mediacom, could have 3.0 mbps speeds or greater. Mediacom will be offering 100 mbps service in some locations. Any town Qwest serves with conventional telephone service also has a DSL 1.5 mbps broadband service available – within a limited area – and the potential to expand it into additional areas and at increased speeds.[xix] All that is preventing such expansion is consumer demand. If the for-profit companies can increase revenues by upgrading and marketing faster broadband options, presumably they will do so.

Is there a national need to provide otherwise-unavailable, speed-dependent online services?

The only limits to what can be done with the Internet are those imposed by failures of human imagination – as anyone knows who spends time online, or even follows the daily Internet-related stories in the media. The Internet offers news, information and education; online shopping; healthcare information and services; a variety of entertainment; travel arrangements; interaction with government agencies and services; weather updates; and stock trading; just to name a few.[xx]

However, the relevant disparity is not between what citizens can access with a 100 mbps service and with no Internet connection at all. It is the incremental benefit provided by a 100 mbps service compared to a 3.0 mbps service, whatever that disparity may be. Then there are the further questions of (a) how essential that incremental benefit is to the nation’s welfare, and (b) the reasons, if any, why the unassisted marketplace cannot deliver that service.

Who will pay for broadband expansion?

If it is determined that the benefits of increasing Americans’ broadband access and speed is of national security or comparable significance, there remains the question of how the incremental costs of providing it should be paid, by whom and to whom.

Children of school age receive at least 12 years of education at no cost to themselves or their parents. The school district’s property taxpayers pay most of the cost. Federal taxpayers pay for the Food Stamp program – which limits how the recipient can spend the funds; as do the free and reduced cost lunch programs in K-12 schools. Given the number of persons killed in auto accidents, Congress legislated the requirement that auto companies include seat belts and air bags in their vehicles – at a cost initially paid for by the manufacturer, and ultimately passed on to the purchaser. The initial encouragement to build railroads across the country took the form of federal land grants. Those who use the highways pay most of the road construction and repair costs every time they fill up the gas tank, in the form of a gasoline tax. When AT&T held what was essentially a monopoly over the telephone industry, the long distance rates paid for by business and urban telephone customers became a source of subsidy that lowered rates for local service. Today the Universal Service Fund serves a similar purpose.[xxi]

These analogies suggest a number of possible theories, or models, for how to fund the cost of extending broadband to unserved areas and increasing its speed.

(a) To the extent there is consumer demand at the providers’ pricing levels there is no need for intervention. (b) As noted above, President Obama and Congress have already provided $7.4 billion of taxpayers’ money to assist with the provision of broadband service to unserved and underserved areas.[xxii] (c) Federal, state and local governments could provide for-profit providers similar funds as direct grants, or as loans paid back with future revenues from the increased customer base. (d) Providers could either decide on their own, or be mandated by the FCC or Congress, to charge sufficiently high rates to high volume users to subsidize the equivalent of, say, a lifeline 3.0 mbps broadband service for, say, $10 to $25 a month (rather than $40).[xxiii] (e) As with public libraries and schools in the pre-computer age, public money (federal or local) could pay for citizens’ Internet access from public libraries and schools.[xxiv] (f) Governments could provide low-income families with information stamps, similar to food stamps. And, of course, there are many other possibilities and combinations.

If there is a need for a national advertising, marketing and education effort to encourage Internet use, who should pay for it?

In their stories about the Horrigan study,[xxv] many news sources reported, “the survey findings show that the FCC plan must . . . focus on teaching people how to use the Internet and convincing them that it is relevant to their lives, said John Horrigan, FCC consumer research director and author of the survey.”[xxvi]

Most companies offering goods and services for sale would expect to have to pay the costs of advertising and marketing them to the public. Why, then, is an exception necessary in this case, necessitating taxpayer funding of broadband marketing?

Moreover, there is little if any need for any institution to undertake a massive public education program regarding the Internet. There are not that many Americans uninformed as to its offerings, given that 78 percent of all adults are already using it.[xxvii] Children are enthusiastic about anything electronic. Many parents undoubtedly believe the national need as to them is, if anything, to restrain their use rather than increase it.[xxviii]

There probably always will be some people who will reject the notion of their using the Internet, with or without broadband. They are not totally irrational in their concerns about identity theft, loss of privacy, viruses and other malware, what seem to them excessive connection costs, and children’s potential exposure to pornography and sexual predators.

There is something decidedly anti-libertarian about the government insisting, or undertaking campaigns encouraging, everyone pay for an Internet connection. It is especially hard to justify spending taxpayers’ money for this purpose given that, to the extent the government’s advertising campaign is successful, the result will be an increase in the revenues going to the for-profit broadband providers – certainly enough to easily cover the cost of advertising.

Moreover, in this instance there are many other institutions that are already deeply involved in encouraging their customers to make use of the Internet – not because they are selling a broadband service, but because customers’ use of the Internet can provide a major reduction in a company’s marketing costs. This would include encouraging customers to use the company’s Web sites rather than catalogs, stock trades online rather than over the phone, or electronic banking. In addition to the brick-and-mortar firms that have an Internet presence, there are also the companies that primarily or exclusively exist online, such as Amazon, eBay, and Google.

Municipal, county, state and federal governmental agencies are also in this category when their own online services or transactions can deliver more, to more people, more cheaply, than when the agency must deal with citizens’ phone calls or in-person visits in government office buildings. There is certainly no reason to restrict agencies from promoting this kind of Internet usage.

Indeed, education of the public by such major institutional users of the Internet may be the most effective form of education, because it involves very specific applications rather than a general “teaching people how to use the Internet and convincing them that it is relevant to their lives.”[xxix]

There is no shortage of potential public policy issues regarding broadband. But with this sampling, let us turn to the primary focus of this paper: consumer protection.

Broadband Consumer Basics

The military, Fortune 500 corporations and government agencies, with their large information technology (IT) departments, usually have access to a sufficiently sophisticated understanding of broadband to make wise decisions (notwithstanding the occasional reports of their major gaffes[xxx]). They can calculate the quantity and quality of the capacity they need, and the most cost effective options for obtaining it.

Most consumers – families and small business owners – cannot. For example, they might be sold and make monthly payments for a 50 mbps service from a cable television company when a 1.5 mbps DSL line from the phone company, at a fraction of the cost, would have been fully adequate and in some ways better.

Indeed, they may not even know what that last sentence means. If it is desirable to expand a broadband service to every home, here are some examples of the basics those potential customers will need to know before the roll out.

What does “broadband” mean?

The FCC defines broadband as “a new generation of high-speed transmission services, which allows users to access the Internet and Internet-related services at significantly higher speeds than traditional modems.”[xxxi] It represents the advance beyond the modems used to connect to the dial-up or POTS (plain old telephone service) predecessors of the Internet and World Wide Web in the 1980s.[xxxii]

For starters, the problem with words and phrases like “broadband” and “high-speed transmission” is that they are almost entirely devoid of meaning. They are like the word “glass,” as in “a glass of” liquid that may vary between four ounces of wine and 32 ounces of a convenience store soft drink in a large plastic “glass.” “Broadband” is something that can and must be measurable in order to be even meaningful, let alone useful.

So how fast is it?

Since the word “broadband” has no inherent meaning, the broadband service providers and regulatory bodies are able to give it whatever meanings they wish to use. The FCC has variously defined “broadband” as 0.200 mbps , 0.768 mbps, and later “basic broadband” as speeds anywhere between 0.768 and 1.5 mbps.[xxxiii] Mediacom offers a 3, 12 and 20 mbps broadband service[xxxiv] – the latter being 100 times faster than the FCC’s early definition of “broadband” – and will offer a 100 mbps service in many locations sometime in 2010. Google is trial marketing a 1000 mbps service.[xxxv]

Bits and bytes.

There’s confusion regarding the rather significant distinction between the federal budget deficit ($1.6 trillion) and the federal debt ($12 trillion).[xxxvi] Similarly, there can be confusion regarding the eight-to-one distinction between a digital “bit” (the higher and lower voltage levels that represent zeros and ones) and a “byte” (the binary number represented by a string of eight bits that may represent a letter of the alphabet).[xxxvii]

Why should this be a consumer concern?

The broadband providers advertise how many bits customers will be able to move in one second. The customer may or may not find that interesting, but the files they create, upload and download are measured in bytes, not bits. Whether it’s a 10,000-byte email (10 kilobytes, or “10 K”), or a 700,000,000-byte feature film (700 megabyte, or “700 MB”),[xxxviii] the reason a customer would want a faster broadband service is related to the number and size of the files with which they deal – a size measured in bytes, not bits.

When the broadband merchants offer an “8 mbps” service their “b” stands for bits, not bytes. Dividing by 8, that means it will enable a consumer to download a one-megabyte file in one second, not an 8-megabyte file. (That feature film is actually roughly 5.6 billion “bits.”[xxxix])

Consumers’ Concerns

At this point, the consumer may be suffering the MEGO effect (“mein eyes glaze over”): “Bits, bytes, who cares? All I want to do is connect to the Internet.” What is the significance of broadband technology for the consumer? What really should be of concern to consumers, and why?

How much speed does one need?

Both the corporate and government planners, on the one hand, and consumers on the other, would do well to become a little better informed about: (a) the ways in which most homes and small businesses are actually using their Internet connections; (b) the benefits that might come from the uses that increased speeds would make possible; (c) the speeds required to enable various uses, with levels of performance most consumers would find acceptable;[xl] and given the fluctuations in speeds (discussed below), it would also be useful to know about (d) the uses that cannot tolerate fluctuations that result in speeds dropping below given minimums – or experiencing outages.[xli]

Without that information, governments as well as consumers may well fall prey to broadband sellers, and end up creating a high-speed national broadband network the primary benefit of which will be the enrichment of the sellers’ shareholders and CEOs.[xlii]

Among the many possible reasons for wanting to expand the reach of the Internet to “to poor and rural areas that have been overlooked by Internet service providers,”[xliii] are the following two. One would be a judgment that equity requires, among other things, that all Americans have the opportunity, should they desire it and be able to afford it, to have a broadband connection to the Internet. Another might be similar to the arguments for compulsory, free public K-12 education: that the benefits from everyone having access to the Internet– benefits for the individual, the economy, and the entire society – are so great that they warrant public expenditure, education and encouragement of that use.[xliv]

We need a sense of the purpose of broadband, a vision of its potential role in the future, our goals, the context in which broadband’s copper wire, coax, optic fiber, microwave or other transmission acquire meaning. Otherwise, broadband will fare little better with its critics than did television, following Edward R. Murrow’s famous description of it as “merely wires and lights in a box.”[xlv]

We are dealing with something no less significant than what separates our species from the others: our ability to create, manipulate and utilize symbols to communicate. That includes communication (a) human-to-human, (b) human-to-machine and machine-to-human, and (c) machine-to-machine. Those types of communication are illustrated respectively by, say, a cell phone conversation between two people, a human deriving information from a database or spreadsheet on a computer, and a geopositioning satellite receiver that controls a farmer’s tractor and corn planter.

These forms of communication affect every aspect of our lives: our relationships with family and friends; how we find jobs (and employees), colleagues, and partners; or organize group political or other activities. They are used in the design, manufacture and sale of products; governments’ interactions with their citizens and other governments; the way we educate our children – and ourselves with various continuing education and training programs. They help run our electric grid and transportation systems; fight crime and wars; diagnose and treat disease.

If it cost no more to install the equipment that would provide 100 mbps connections than 1.5 or 3.0 mbps connections, it would obviously make sense to install the former. Precise predictions as to how rapidly those speeds will come to be the norm are very difficult. But it does seem safe to assume that “larger, faster, bigger, better” will continue to drive hardware manufacturers, broadband services, and content providers – as well as consumers – to any and all new uses that will provide individual companies with a competitive edge and increased profits.

However, assume there are significant additional costs associated with orders of magnitude increases in speed (as seems to be the case), and assume a slower system today is expandable into a faster system tomorrow at reasonable cost. In that case, the wiser path might be to emphasize connection over speed, rather than leaving many with no Internet connection at all. That is to say, those costs would support a policy under which all Americans would be provided a connection to the Internet at whatever minimum speed will serve 95 percent of the users 95 percent of the time; say, 1.5 or 3.0 mbps in the 2010-to-2015 timeframe.[xlvi] Bringing everyone “up to speed,” so to speak, at even those minimum speeds, will take time enough. Expansion beyond that can come later – by which time there may be new, alternative technologies that are even better and cheaper than those now available.[xlvii]

At the present time, there is little or no explanation in the marketing and advertising for broadband of the different minimum speeds that are necessary to, say, send and receive email, or view the New York Times online, or watch streaming movies from Netflix or Hulu, or play online games. And yet it is somewhere between difficult and impossible for consumers to make informed broadband purchasing decisions without that data.

Consumers no more “use broadband” than they “watch television”; they watch specific programs, and utilize broadband for specific purposes. Therefore, policy planners also need to address the uses thought to be so essential to the national interest as to warrant government intervention or funding. One of the more common high speed uses in 2010 are the online video games that benefit from as much as a 50 mbps or faster service, because of their high definition picture quality and rapid movements. Is that use worthy of taxpayer subsidies? If not, what uses are?

In an economy sustained in some measure by otherwise rational consumers spending money they don’t have for things they don’t need, why should broadband be any different? Are some consumers lulled into purchasing faster and faster broadband speeds out of a sense that it is “cool” or “awesome” to have such speed whether it’s used or not? Do they meet Molly Ivins’[xlviii] definition of those Texans who believe “that more is better, and too much is not enough”? In America anyone – or at least anyone unconcerned about the economic and environmental impact of their mounting credit card debt – is entitled to hold (and pay for) such beliefs.

But those Americans trying to live within their ever-declining means who have been deceived into buying more broadband than they need are also entitled. They are entitled to a little more information about what they would actually benefit from paying for and why.

And there are other reasons why many customers may be paying more than they should, for more than they need, not getting what they’re paying for, and not even using what they are getting.[xlix]

“Your mileage may differ.”

One of the more troublesome aspects of industry marketing of broadband is the phrase “up to” (e.g., Medicom’s offer, noted above, of “download speeds up to 20 mbps”).[l] This may qualify as the kind of false and misleading advertising that should be of concern to the Federal Trade Commission. It may even meet the legal definition of fraud. Such issues are beyond the scope of this paper. The best that can be said is that such marketing clearly leaves unspoken the fact that a customer’s actual download speeds may end up being a half or less of what’s advertised, and will probably never reach the promised speed.

At a minimum, it would seem that the industry ought to be legally required to include the actual numbers in its promotional materials – just as canned food producers are required to list ingredients on labels, and pharmaceutical companies are required to list their drugs’ side effects in TV commercials. Failing that, federal, state or municipal governments (or perhaps foundations or non-profit organizations) could assume this informational function.

The variables.

A large number of possible variables can affect the speed at which a broadband customer’s computer will download content. One, of course, is the promised “up to” speed coming into the home or business; whatever the actual results with any advertised speed may be, they will probably be faster with an “up to” 20 mbps service than an “up to” 3 mbps service. Another is the means by which the computer connects to the incoming line, such as an Ethernet cable or wireless Wi-Fi router (the latter being, in the author’s experience, capable of speeds a half, or less, the speed of the former).

If Wi-Fi (which is popular in most homes with broadband) is used, variables include the capacity of the broadcasting router and receiving network card (e.g., 802.11g or 802.11n), their interoperability, distance of the computer from the router, building construction and other obstructions, and possible interference from other nearby transmitting devices such as portable phones.[li]

The number of other users at the time, both on premises,[lii] in the neighborhood, and connected to the same node or switching station, can affect speeds,[liii] as can the capacity of the user’s computer.[liv] For a laptop or handheld device connected to the Internet via a 3G or 4G cell phone network, the advertised speed will be for the unit when stationary; the reception while in motion will be significantly slower. Moreover, even if those factors are constant and the computer is not moved, if Wi-Fi-is used, and the connection speeds are tested periodically even three or four times[lv] they will vary from moment to moment, often widely, for seemingly inexplicable reasons.

Obviously, if the business or home customer has a bit of hardware, or a use, that requires a constant rate of speed, or at least a speed that never falls below a certain minimum, a service that cannot guarantee that speed at all times is simply unacceptable.[lvi] For those whose uses are more casual, such variability is much less significant.

What customers pay for, what they get, and what they use.

In figuring the cost and value of a broadband service, given the industry’s pricing structures, there are three questions to consider.

(1) What are customers paying for? If a customer has signed up for, say, a 12mbps service, they might not be unreasonable in assuming (even though it is not true, and they would never use it in this way) that they can download or upload 12mb worth of files any and every second, 24/7.

(2) What do they get? Obviously, just as in the days when AT&T used to get overloaded and go down occasionally on Mothers’ Day or Christmas, a broadband service is not engineered to provide, and cannot provide, every customer maximum throughput 24/7. Thus, at the threshold the companies cannot deliver to every customer what they are selling.

(3) Downloads and uploads. For all the reasons described above, a broadband customer “downloading” files from the Internet to his or her computer will often get less than what they are paying for under the best of circumstances. What speeds will they get when “uploading” a file from their computer to the Internet? Although seldom heavily promoted in broadband advertising, upload speeds often run no better than about one-tenth of the download speeds (e.g., if the customer is promised an “up to” 50mbps service, it may turn out to be a 4-to-4.5 mbps upload service). This is apparently a deliberately designed-in degradation of service customers should have the right to know about.

(4) Not only do customers not get what they are paying for, they are actually using radically less than what they are getting.

For starters, with extremely rare exception home users who have jobs, or otherwise have a life apart from computing, are not doing anything at all with an Internet-connected home computer for well over half of the 168 hours every week.[lvii]

In addition, as discussed above, even when they are connected to the Internet a great deal of most users’ tasks require, and use, far less bandwidth than the maximum for which they are paying.

Imagine that it was possible to calculate the bandwidth actually used, multiplied by the minutes during which the customer connects at that speed, and divide it into the monthly bill. The price per bandwidth minute would be orders of magnitude greater than appears when thought of as a “monthly” bill for continuous service.[lviii]

Thus, buying broadband service can turn out to be the Internet equivalent of buying a 200 mph car to drive around a town with 25 mph speed limit signs; or paying to attend or watch a football game for 180 to 220 minutes that only offers 11 minutes of action.[lix]

Pricing.

To make matters worse, even when viewed as a monthly charge for 24/7 operation at the promised speeds – neither of which will occur in the experience of most customers – the pricing may be excessive.

In most communities, pricing for comparable services is restrained by neither competition nor regulation (such as the common carrier “cost plus return on investment” formula) – not federal, not state and not local regulation of prices.[lx] A customer who wants more than the phone company’s 1.5mbps DSL service[lxi] may well be limited to the local monopoly cable company, free to price its service for 3, 12, 20 and 100 mbps at whatever the market will bear in order to maximize its cash flow and profits.[lxii] Mediacom reports the Iowa City, Iowa, monthly prices for those speeds are $44.95, $62.95 and $74.95 respectively (the 100 mbps service is not yet available as of February 2010).[lxiii]

Options in gradations of speed and price. Obviously, it is to the broadband providers’ advantage to charge customers as much as possible. One means to that end is to have a relatively high entry price ($44.95 for a 3 mbps service), with upgrades at relatively lower pricing differentials ($62.95 for a 12 mbps service): “Do you know we can give you four times the speed for only $18 more?”

A reasonable conclusion from the assertions of Robert Shapiro and Kevin Hassett[lxiv] is that if something like “broadband to every home” is a national policy goal,[lxv] the entry level is going to have to be something closer to 1.5 mbps for $10 to $25 a month, say, than 3.0 mpbs for $44.95.[lxvi] To the extent that is below-cost pricing, it is possible to make up the differential in a variety of ways.[lxvii]

More options for speeds and pricing would further serve consumers, and result in more broadband users, by enabling them to more precisely select and pay for the speeds most closely aligned with their needs.

Regulatory Issues

Alternative technologies and timing.

As mentioned, above, a DSL line from a telephone company is a possible alternative to the broadband services of cable companies. There are others. Some speculate that cell phone networks with “3G” (up to 14 mbps) and “4G” capacities[lxviii] may become the Internet backbone of the future.[lxix] Some rural phone companies offer terrestrial, point-to-point microwave delivery of the Internet.[lxx] WiMAX (up to 10 mbps),[lxxi] covering larger areas than Wi-Fi (up to and including the potential to serve at least some smaller towns in their entirety), or satellite distribution systems with global reach,[lxxii] are other possibilities.

The descriptions Internet “backbone,” “middle mile” and “last mile” refer to, respectively, the portions of the network that tie countries and regions together, those that tie those regional hubs to municipalities, and those that fan out to individual homes and businesses.[lxxiii] Cable and phone company broadband providers are concerned with the middle and last mile. Technologies utilized by providers include optic fiber, coaxial cable, and copper wire, among others, with fiber (“the glass highway”) the most common preference in 2010.

The point is neither that there is now some other, preferable technology for broadband extension than cable and DSL, nor that its imminent availability suggests the wisdom of postponing the technologies now used.

The point is, rather, that (1) we are dealing with a timeline that involves an ever-evolving set of modified and new technologies, seemingly changing at an ever-increasing rate of change, (2) we cannot predict what alternatives may be available, and which among them may appear to be the wisest choice, ten years or more from now, and (3) just as providing everyone in America with a 56 kbps modem might not have been the most cost effective move in 1990, so wiring every home with optic fiber broadband in 2010 might not be either.

Outages and redundancy.

When the author served as an FCC commissioner (1966-73) the agency was promoting the potential of communications satellites as part of a global communications system. It was mindful, however, of the advantages of under-ocean cables as well. Not only did both systems have their advantages, each could serve as a backup to the other.[lxxiv]

In January 2010 Mediacom had a roughly 12-hour outage in its Internet service.[lxxv] This was not the first time, nor will it likely be the last, that its “always on” access to the Internet has failed and frustrated its customers. It seems to be a relatively regular occurrence. The month before, customers were without any reliable email service for weeks, not hours.[lxxvi] And Consumer Reports’ reader survey of customer satisfaction ranked the bundled Internet service of Mediacom 24th of 27 companies, with a next-to-worst ranking on “reliability” and “phone/online” support, and a worst ranking for “in-home” support.[lxxvii]

This is not to say that Mediacom should be no part of any state’s broadband plan. The author is now, and will probably continue to be, a Mediacom Internet subscriber. It is only to say that, especially with regard to emergency, business, and other non-frivolous communication and Internet planning and use, that some customers simply must have their contracted-for broadband speeds available 24/7.[lxxviii] Thus, policy planners and customers need to take into account the probability of occasional outages – and provide for themselves something in the form of redundancy and backups of various kinds, as with voice phone.[lxxix]

Some Final Thoughts

(1) Given the possibility, indeed the probability, of evolving alternatives to today’s technology, the best long vision might be the shortest range planning. As discussed above, based on 2010 standards, this approach might suggest serving the least well served, lowest population density areas with DSL 1.5, or cable 3.0 mbps, broadband “to the curb” (as a minimum), and at a subsidized price. Urbanized, higher population density areas might aim for something closer to 12 mbps as a minimum. (Of course, these numbers are merely illustrative possible examples; moreover, whatever speeds are actually selected will undoubtedly continue to increase over time.)

(2) One solution to excessive pricing would be some form of federal or state cost-based price regulation. Another would be for states or municipalities to buy Internet access in bulk, or build their own systems, to provide a benchmark and competitive alternative in those areas with little or no commercial competition.

(3) Regardless of these or other approaches, a relatively cost-effective supplement in any case would be for public funding of something on the order of a 3 or 12 mbps service in every public high school and public library[lxxx] in towns over a population of, say, 500 or 1000. This would provide at least some Internet access for those unwilling or unable to pay for even a subsidized service to their homes.

(4) Some institutional provision of consumer protection (and education) is essential if the United States, or any given state, is to see the benefits from an expanded Internet.

The technological, economic and political power of the providers is too great. What families and small business owners need to know to make wise decisions in the marketplace is too complex. The combination of the near de facto monopoly power of providers, coupled with the total abdication by governments at all levels of any regulatory responsibility, compels the creation of consumer-oriented institutions.

Adequately staffed and funded, and independent of both industry and government agencies beholden to industry, such institutions could advocate on consumers’ behalf with companies and government bodies. They could also monitor national and overseas case studies of alternative technologies and business models, and local broadband prices, comparing them with prices elsewhere in the United States and the world. They could collect data, prepare reports, and put forth proposals; offer a variety of content and modes of distribution for consumer information and education; and serve as the go-to place for frustrated consumers with complaints.

All of this is not to say that there are no advantages for our nation and its people from expanding broadband and increasing the speed of Internet access beyond that of 56kbps modems. It is only to say that the issues surrounding who needs to have access to what, and when, the speeds and the cost, and who pays and how, are far more complex – for system designers and consumers alike – than merely “expanding broadband.”

REFERENCES

Note: Over 59,000,000 hits return from a Google search on “broadband.” This list of references is obviously but an illustrative handful.

Web sites

(an FCC site, ; see especially dropdown menu, About Broadband, , for basic broadband overview)

The Aspen Institute Communications and Society Program,

Berkman Center for Internet & Society,

Center for Digital Democracy, (click on “Current Projects,” )

Consumer Federation of America, (see especially dropdown menu, Communications/Internet , for testimony and other materials)

Freepress, (see especially dropdown menu Policy Updates/Internet/“Internet Policy,” , for links to numerous articles and filings from freepress and others)

Media Access Project, (click on Issues/Broadband/Open Access, )

Public Knowledge, (see especially dropdown “Issues,” , scroll down to, and click on links to broadband-related topics)

Speed Matters (CWA),

Stanford Center for Internet and Society,

TeleTruth (“Alliance for Customers’ Telecommunications & Broadband Rights”),

Reports and Articles

FCC, “Connecting America: The National Broadband Plan,” March 16, 2010,

Berkman, “Next Generation Connectivity: A Review of Broadband Internet Transitions and Policy from Around the World (Final Report),” The Berkman Center for Internet and Society at Harvard University, October 2009 (draft), February 16, 2010 (Final Report),

John B. Horrigan, “Broadband Adoption and Use in America,” OBI Working Paper Series Number 1, FCC, February 2010,

“Broadband Adoption in Low-Income Communities,” Social Science Research Council (Dharma Dailey, Amelia Bryne, Alison Powell, Joe Karaganis, and Jaewon Chung), March 2010,

The Information Technology & Innovation Foundation, "The Internet Economy 25 Years After .Com: Transforming Commerce & Life," March 2010 (Robert D. Atkinson, Stephen J. Ezell, Scott M. Andes, Daniel D. Castro, and Richard Bennett),

“Scenarios for a National Broadband Policy,” Report of the 24th Annual Aspen Institute Conference on Communications Policy, The Aspen Institute, Communications and Society Program (2010; David Bollier, Rapporteur),

Networking the Green Economy: How Broadband and Related Technologies Can Build a Green Economic Future, March 2010 (Progressive States Network; Communications Workers of America; Sierra Club; BlueGreen Alliance),



Karl Bode, “FCC Afraid to Tackle Open Access; Broadband Plan Architect Believes There’s ‘No Appetite’ For It. Wait, What?” Broadband/DSL Reports, March 2, 2010,

Laurence Cruz, “Cisco Puts an Internet Router in Space; In a Move that Could Revolutionize Satellite Communications, Cisco Extends the Internet Into Space for Testing by the U.S. Government and Businesses,” Cisco, January 19, 2010,

Doris J. Kelley, “A Study of the Economic and Community Benefits of Cedar Falls, Iowa’s, Municipal Telecommunications Network,” Black & Veatch, October 2, 2003, updated July 6, 2004,

freepress, “Changing Media: Public Interest Policies for the Digital Age,” May 2009, 289 pp., (see especially Part I: The Internet, chapters 1-6)

Andy Opsahl, “Is the Federal Government’s Defined Speed for Broadband Too Slow?” Government Technology, January 8, 2010,

“Broadband access gap remains large; Commerce Department report points to 40 percent of Americans who lack high-speed internet access,” eSchool News, February 17, 2010,

( Nicholas Johnson is a former commissioner, Federal Communications Commission, and Iowa City Broadband and Telecommunications Commission, who teaches media and cyberlaw at the University of Iowa College of Law. This paper was originally prepared for the Iowa Department of Economic Development (IDED), Infrastructure Coordinated Planning Project, Telecommunications Sector Committee, of which the author was a member. The project has been managed and facilitated by the State Public Policy Group (SPPG). The paper does not represent the views of the Committee, the SPPG, the IDED, or the University of Iowa. The paper is a work in progress, as is the Internet, and is expanded and otherwise modified as errors and additional information come to the author’s attention. The author thanks the following for reading, and their comments regarding, earlier drafts: Laura Bergus, UI College of Law, Class of 2011; Michael Brau, Cable Television Administrative Aide, City of Iowa City; Robert J. Hansen, Senior Software Engineer, ManTech Incorporated, Washington, D.C.; Jesse Huang, UI College of Law, Class of 2010; Gregory P. Johnson, Director, Technology Services Resource Group, Iowa City, Iowa; Sherman Johnson, Automatic Train Control, Metro, Washington, D.C. All spoke in their individual capacity, and not as representatives of their employers. It should not be assumed that any of them necessarily support the author’s assertions, proposals and conclusions. The author takes responsibility for all errors. Email: mailbox@; Blog: ; Web: .

-----------------------

ENDNOTES

[i] Cecilia Kang, “$7.4 Billion in Stimulus Projects to Extend Broadband to Rural Areas,” Washington Post, December 18, 2009, .

[ii] Other examples of “infrastructure” might include the Interstate Highway System and other modes of transportation; gasoline and natural gas pipelines; the landline and cellular telephone networks; and the electric power grid. A municipality’s services can include such things as water and sewer networks, municipal bus and subway systems, and municipal communications networks for cable television and the Internet.

[iii] ”[B]roadband connectivity stood at about 150 million lines in June 2008. Nearly 47 percent of these connections are cable lines; about 34 percent are DSL [phone] lines. Some 16 percent are satellite, fixed wireless, mobile or power lines. Less than 3 percent are fiber wires.” Eli Noam in David Bollier, Rapporteur, Scenarios for a National Broadband Policy, Report of the 24th Annual Aspen Institute Conference on Communications Policy, The Aspen Institute, Communications and Society Program (2010), p. 3, .

[iv] John B. Horrigan, “Broadband Adoption and Use in America,” OBI Working Paper Series Number 1, FCC, February 2010, p. 3, .

[v] “Among low-income Americans—those whose annual household incomes fall below $20,000—broadband adoption stands at 40 percent.” Ibid. And see note 3, supra.

[vi] As an example of “buy, build or invent,” during the meetings of the Iowa Department of Economic Development (IDED), Infrastructure Coordinated Planning Project, Telecommunications Sector Committee, of which the author was a member, an executive of Musco Lighting, , – a global company located in Ottumwa, Iowa (population 25,000) – told of his company’s need for, and frustration at its inability to acquire, adequate broadband service from the available suppliers. Musco’s solution? It simply built its own telephone company, with broadband service up to 100 mbps. See “Broadband Internet Possibilities” (slides 23-34), .

[vii] “Discounted Telecommunications Services for Schools and Libraries E-Rate Fact Sheet,” U.S. Department of Education (last updated June 20, 2000), .

[viii] “On average, Americans pay nearly $41 per month for broadband service, but half of those who receive their broadband in a bundle with other services cannot identify the Internet portion of their bill.” John B. Horrigan, note 4, supra, p. 3. “Among broadband users who subscribe to a stand-alone high-speed service at home (i.e., they do not have service in a bundle), the average monthly bill reported was $46.25.” Id., p. 4.

[ix] The FCC reports that “36 percent of non-adopters cite cost as the main reason they do not have high-speed Internet at home.” John B. Horrigan, note 4, supra, p. 5. Consistent with this figure is, “Who’s Not Online: 57% of Those Without Internet Access Say They Do Not Plan to Log On,” Pew Internet & American Life Project, September 21, 2000 (“47% of those under 30 believe the Internet is too expensive [but] just 29% of those over 64”). .

[x] The FCC reports, “22 percent of non-adopters cite factors pointing to lack of digital literacy as the main reason they are not online. These include people who are not comfortable with computers or, for non-internet users, are ‘worried about all the bad things that can happen if I use the Internet.’ . . . 19 percent of non-adopters do not have broadband because they question its relevance to their lives. They do not believe digital content is sufficiently compelling to justify getting it. Specifically, these non-adopters say the Internet is a ‘waste of time,’ do not think there is anything worth seeing online and (for dial-up users) say they are content with their current service. Dial-up users make up a disproportionate share of those citing lack of relevance as a barrier.” John B. Horrigan, note 4, supra, p. 5. Joe Waz: “fears and uncertainties about the Internet [include] the need to protect people’s privacy and protect them against fraud . . . cyber-security issues, child pornography and content piracy.” “Scenarios for a National Broadband Policy,” note 3, supra, p.11.

[xi] “Of these non-adopters [35% of all Americans], 12 percent say they cannot get broadband where they live. This translates into a 4 percent share of Americans—on the basis of their reports on infrastructure availability in their neighborhood—who say they are unable to obtain broadband because it is not available. This means that 31 percent of all Americans can get service but do not.” John B. Horrigan, note 4, supra, p. 5. And of course a significant proportion of even that 4% probably would have access to a telephone dial-up Internet access. However, “One in 10 rural non-adopters say they cannot get broadband where they live. That is more than twice the average.” Id., p. 7.

[xii] In part, of course, the lack of easy Internet access in America’s smallest towns and rural areas is but a specific sub-set of the more general challenges confronting such areas. With their declines in population, and the rise of a deregulation, marketplace ideology, legislative bodies have become ever more representative of urban populations. As a result, rural areas have suffered a decline in air, rail and bus transportation. Wal-Mart stores have replaced local merchants. Post offices and medical clinics have closed. Local K-12 schools have consolidated with neighboring school districts. Rural and small town broadband access may slow these trends marginally, but it is unlikely to reverse them, given most individuals’, especially young persons’, preference for many of the aspects of urban living. However, “Rural Americans with broadband . . . are as active as their urban and suburban counterparts in using the Internet for shopping and taking classes online, suggesting that they use broadband as a way to virtually access the benefits associated with urban or suburban living.” John B. Horritgan, note 4, supra, p. 7.

[xiii] The Pew internet & American Life Project reports 93% of adults ages 18 to 29 now have cell phones. “One-third of Americans (32%) have used a cell phone or Smartphone to access the internet for emailing, instant-messaging, or information-seeking. This level of mobile internet is up by one-third since December 2007, when 24% of Americans had ever used the internet on a mobile device. On the typical day, nearly one-fifth (19%) of Americans use the internet on a mobile device . . ..” John Horrigan, “Wireless Internet Use,” Pew Internet & American Life Project, July 22, 2009, .

[xiv] See Widernet, .

[xv] If the reader is unfamiliar with this terminology, a kilobit is 1000 bits, a megabit one million bits, and a gigabit is one billion. This paper uses megabits throughout to make the comparisons easier for the reader.

[xvi] “Think Big With a Gig: Our Experimental Fiber Network,” The Official Google Blog, February 10, 2010 (“Imagine sitting in a rural health clinic, streaming three-dimensional medical imaging over the web and discussing a unique condition with a specialist in New York. Or downloading a high-definition, full-length feature film in less than five minutes. Or collaborating with classmates around the world while watching live 3-D video of a university lecture. Universal, ultra high-speed Internet access will make all this and more possible.”), .

[xvii] Ibid.

[xviii] “In the broadband Internet industry, the ‘middle mile’ is the segment of a telecommunications network linking an operator's core network to the local network plant, typically situated in the incumbent telco's central office, “Middle Mile,” Wikipedia, .

[xix] A Qwest executive told the author that the company could supply 1.5 mbps DSL service to any customer within 1800 feet of the main switching station in every community in which it offers telephone service. It is the provision of DSL service beyond that point, or at higher speeds, that varies from community to community.

[xx] The FCC focuses on broadband’s potential contribution to "providing jobs and creating economic opportunity," "improving healthcare and controlling costs," "providing more educational opportunities and improving outcomes," "promoting energy independence and efficiency," "enhancing government performance & increasing civic engagement," and "increasing public safety & homeland security." "Broadband Plan's Working Recommendations for Key National Priorities Unveiled; Plan Shows How Broadband Can Transform Key Sectors to Provide Better Quality of Life," News Release, FCC, February 18, 2010, . And see the PowerPoint presentation to the Commission on February 18, 2010, “National Broadband Plan: National Purposes Update,” .

[xxi] “Universal Service Fund,” Wikipedia, .

[xxii] Note 1, supra.

[xxiii] “Non-adopters concerned with cost would be willing to pay, on average, $25 per month for broadband. Non-adopters who cited the monthly cost of broadband as a reason they did not have service received a follow-up question asking them to estimate how much they would pay for service. Among this group: 52 percent were able to provide an estimate; it averaged $25 per month. 28 percent answered ‘don’t know’ to this question. 20 percent said they were not willing to pay anything for broadband.” John B. Horrigan, note 4, supra, p. 5.

[xxiv] See note 6, supra.

[xxv] John B. Horrigan, note 4, supra.

[xxvi] E.g., Joelle Tessler, “FCC survey shows need to teach broadband basics,” AP/Miami Herald, February 23, 2010, .

[xxvii] See Horrigan, note 4, supra, p. 3 (“78 percent of adults are Internet users, whether that means broadband, dial-up, access from home or access from someplace other than home”).

[xxviii] See, e.g., , “Parents’ Concern: Too Much Time Online,” Yahoo! Kids, .

[xxix] See text at note call 25.

[xxx] See, e.g., “Data Loss Archive and Database,” , .

[xxxi] “Internet,” Federal Communications Commission, .

[xxxii] "Although the basic applications and guidelines that make the Internet possible had existed for almost two decades, the network did not gain a public face until the 1990s. On 6 August 1991, CERN, a pan European organization for particle research, publicized the new World Wide Web project. The Web was invented by English scientist Tim Berners-Lee in 1989. An early popular web browser was ViolaWWW, patterned after HyperCard and built using the X Window System. It was eventually replaced in popularity by the Mosaic web browser. In 1993, the National Center for Supercomputing Applications at the University of Illinois released version 1.0 of Mosaic, and by late 1994 there was growing public interest in the previously academic, technical Internet. By 1996 usage of the word Internet had become commonplace, and consequently, so had its use as a synecdoche in reference to the World Wide Web." “The Internet,” Wikipedia, .

[xxxiii] Elliott C. Back, “FCC Definition for Broadband Now 768Kbps,” March 22, 2008, Internet & Technology, ; see generally, “Broadband internet Access,” Wikipedia, .

[xxxiv] “Internet,” Mediacom, .

[xxxv] See note 15, supra. For comparative purposes, an 5.6 billion bit movie that would take 28,000 seconds to download at 0.200 mbps – 7 hours and 47 minutes – theoretically could be downloaded in a little over 5 seconds with a 1000 mbps service.

[xxxvi] “’Debt?’ ‘Deficit?’ What’s the Difference?” May 1996, .

[xxxvii] Marshall Brain, “How Bits and Bytes Work,” How Stuff Works, .

[xxxviii] Of course, with “compression” file sizes can vary. A song in compressed mpg format will be a much smaller file than in “CD quality.” As “quality” improves so does the file size of digital photos (in pixels) or video (as in high definition, HD). A feature film downloaded from iTunes would more likely be a 1400 MB than a 700 MB file.

[xxxix] For the impact of broadband speed on download time, see note 35, supra.

[xl] What consumers will find “acceptable” is obviously as much or more a function of their perception of differences in speed as it is a function of precise data regarding speed. It is said that, “A difference to be a difference must make a difference.” Whether it takes two seconds, or two-tenths of a second, to load the New York Times onto a consumer’s computer screen may be noticeable, may “make a difference,” to some users and not others. The author knows of an academic who got so fed up with the poor service and excessive prices from both cable and phone companies that he simply uses a cheap (it may even be free) dial-up service for his regular connections to the Internet and Web. If a file is going to take awhile to download, he simply uses the time to read journal articles, books, or do other tasks around the home. He connects to the Internet, but feels no compulsion to connect via broadband.

[xli] See, e.g., note 78, infra.

[xlii] The 24th Annual Aspen Institute Conference on Communications Policy addressed four possible scenarios regarding high and low demand and supply of broadband. Scenarios for a National Broadband Policy, note 3, supra.

[xliii] See note 1 and accompanying text.

[xliv] See notes 19, 22 and 26 supra, and 46, infra, for the implications of this goal for pricing and options. And see text following sub-head in text, supra, “If there is a need for a national advertising, marketing and education effort to encourage Internet use, who should pay for it?”

[xlv] “This instrument can teach, it can illuminate; yes, and it can even inspire. But it can do so only to the extent that humans are determined to use it to those ends. Otherwise it is merely wires and lights in a box. There is a great and perhaps decisive battle to be fought against ignorance, intolerance and indifference. This weapon of television could be useful. Stonewall Jackson, who knew something about the use of weapons, is reported to have said, ‘When war comes, you must draw the sword and throw away the scabbard.’ The trouble with television is that it is rusting in the scabbard during a battle for survival.” From the conclusion of Edward R. Murrow’s speech to the Radio and Television News Directors Association (RTNDA), October 15, 1958, .

[xlvi] This service might be provided by municipalities for “free” (i.e., paid for by taxpayers), like the police and fire departments, city streets, public schools and libraries. A subsidy, like the Universal Service Fund for landline telephone service, could cover the cost. Or the pricing for the very highest broadband speeds and high volume users might pay for some of it. As Robert Shapiro and Kevin Hassett put it, “Reaching universal broadband may well depend in large part on who pays for that additional investment. One option is to raise the monthly fees of all broadband subscribers. But a new study we conducted with support from Georgetown University’s Center for Business and Public Policy found that this approach would make broadband too costly for many Americans, especially many of those with lower incomes who are not yet online, and so would delay universal broadband access. A better solution can be based on more flexible pricing strategies that collect a greater share of the additional revenues needed for the additional investment from those consumers and content providers who account for most of the fast-rising bandwidth demand. That would be fairer, too. After all, some 10 percent to 20 percent of Internet users are said to consume about 70 percent to 80 percent of available bandwidth.“ Robert J. Shapiro and Kevin A. Hassett, “Broadband Investment and 100 Percent Adoption: Who Pays?” Roll Call , November 16, 2009, .

[xlvii] In the meantime, there would be no reason why companies willing to offer, and customers willing to pay for, higher speeds, could not do so.

[xlviii] “Molly Ivins,” Wikipedia, .

[xlix] Cable operators anticipate the eventual consumer demand for ever-greater bandwidth, such as for high definition video. It is understandable that they would want to build this capacity before there is a demand for it. However, they may now be pushing customers to buy faster speeds just because they can, not because the customers really need the speed at this time. When AT&T first offered an Integrated Services Digital Network, or ISDN, some wags said the acronym stood for “Innovations Subscribers Don’t Need,” meaning that telephone subscribers who did not want or need the service would nonetheless find themselves paying for the cost of its introduction in the form of higher monthly phone bills. For someone who is primarily using the Internet for email and modest Web surfing a 100 mbps Internet connection could also end up being an unwanted and unneeded, costly innovation. And see notes 9, 22 and 43, supra.

[l] See note 33, supra.

[li] See, e.g., Todd Haselton, “A need for speed: 802.11n router roundup,” ars technical, November 5, 2007, ; Victor Loh, “Real-World Interoperability Tests of Five 802.11n Routers,” ExtremeTech, September 7, 2006, .

[lii] Thus, a consumer who is (a) sharing a Wi-Fi distribution network with a number of family members, (b) doesn’t care about the cost, and (c) doesn’t mind that they’re neither getting what they pay for nor (d) using what they get, might welcome the excess capacity. That way, when everyone is online at once, the further degradation occasioned by that multiple use would still leave everyone with a large enough share of the bandwidth.

[liii] Given the fact that, by definition, most users are downloading files during “peak times,” the most relevant information for them to have about the speed of service is the speed during those times of greatest usage, which can be as little as half of the advertised speeds. The broadband providers have this information for each node, and can calculate the node’s average peak time speeds. Perhaps broadband service providers should be required to split a node when its peak time average speeds fall below some designated percentage of the rates consumers have purchased. At a minimum, the companies should be required to advertise, and notify customers, of what those speeds are.

[liv] Other factors affecting speed may be the quality of the line and signal coming to the modem. If the modem is not connected as the first thing off the drop line, if there are splitters between that point and the modem, the quality of the line and old or substandard connectors can affect the quality and speed of the signal. It is possible for customers to test their line quality, and perhaps cable operators should be required to inform customers how to conduct the tests.

[lv] One free service that tests speeds is Speakeasy, .

[lvi] See text at note call 38, (d).

[lvii] Of course, there are many online operations by a computer that do not necessarily require the presence of its owner, such as downloading an extremely large file, like a movie, downloading and installing updates at a scheduled time each day, or the Search for Extraterrestrial Intelligence (SETI) linked computers project. Seti@Home, . For a consumer who makes such uses of his or her computer, the price per unit time of use is obviously much less.

[lviii] Assume a Mediacom customer purchases a 12 mbps service for $62.95 a month (see text at note call 63). That totals $755.40 for the 8760 hours in a year, 8.6 cents an hour, and $2.06 for a 24-hour day. Assume the customer is a heavy user and actually gets the 12 mbps download speed she is paying for – unrealistic assumptions favoring Mediacom. She comes home from work, has dinner and then downloads that 5.6-billion-bit movie (see, text following the heading “Broadband Consumer Basics/Bits and Bytes,” above, and note 38, supra) in the roughly 8 minutes it would take at 12 million bits per second. She spends the next two hours watching the movie and goes to bed. At 8.6 cents an hour those 8 minutes of downloading should have cost her $0.01 – a penny. Instead, since it was her only use that day, it cost the daily charge of $2.06 – over 200 times as much. She may think it worth it to get a movie for $2.00 that would have cost $7.00 or more at a theater. She may neither know nor care about cost. Her computer may also have been performing tasks for her while she was not there, see note 57, supra.

However, the fact remains that if a company can sell, resell, and resell again the same bandwidth during the same period of time to more than one user – a service that no customer ever actually gets, and few ever use for more than brief bursts of time – its revenues can far exceed what its costs and pricing suggest. Coupled with the customers who really are heavy users for hours each day, this is but one of many potential examples of why the industry, as well as consumers, need both more sophisticated pricing alternatives and some form of price competition or regulation. The author has been told, but cannot now document, that the numbers are something like 5% of the users drawing down 50% of the available bandwidth, with the remaining 95% of users using the other 50%. Thus, one possible and rather obvious win-win could be to continue to provide the 95% of users a relatively low flat monthly charge (so as to encourage their Internet use, as any given additional use would be incremental-cost-free to them) while charging on the basis of usage those who are the 5% heaviest users. And see note 46, supra.

Some operators have experimented with metered billing, or caps on maximum consumption of bandwidth. Both have proven to be unpopular. They have tended to increase costs to consumers, who do not have effective means of monitoring their own use. And some people find the caps chosen by the companies to be too low.

[lix] David Biderman, “11 Minutes of Action,” Wall Street Journal, January 15, 2010, .

[lx] Here is an illustration of the difference regulation can make in a related context. Iowa City, Iowa, is located in Johnson County. The City of Iowa City regulates Mediacom’s rates for “basic cable.” However, it has no jurisdiction to regulate the company’s rates throughout the rest of the county. The unregulated, county rates are more than twice the regulated rates in the city.

[lxi] See note 19, supra.

[lxii] Qwest advertises DSL speeds of 1.5, 7, 12 and 20 mbps. Ibid; and see Qwest/Internet, ; click on “Find the perfect Internet connection speed for you.” DSL has the advantage of little to no “peak use” degradation. Moreover, DSL is often cheaper than cable companies’ Internet service. However, there are presently far fewer geographic locations in which these speeds can be offered via DSL than via cable, see note 19, supra.

[lxiii] Information provided the author by phone from Mediacom’s 800-362-1895 customer service number, January 16, 2010. The author has been informally informed, but has not confirmed, that these rates are roughly double what are available in some other countries and communities in the U.S. Consistent with that assertion are reports that the profit margins on the provision of broadband service run as high as 80%. Vishesh Kumar, “When is the Cable ‘Buy’ Set to Come? Soon, Perhaps, as Values of Firms Like Comcast Begin to Look Attractive,” Wall Street Journal, April 3, 2008, p. C1 (“Comcast, for instance, has a profit margin of . . . 80% for broadband . . ..”), .

[lxiv] See note 44, supra.

[lxv] See text at note call 13, supra.

[lxvi] See notes 8, 9 and 23, supra.

[lxvii] Ibid; note 44, supra; and text following heading, “Broadband Promotion: Issues and Overview/Who will pay for broadband expansion?”

[lxviii] “A 4G cellular system must have target peak data rates of up to approximately 100 Mbit/s for high mobility such as mobile access and up to approximately 1 Gbit/s for low mobility such as nomadic/local wireless access, according to the ITU requirements. Scalable bandwidths up to at least 40 MHz should be provided.” “4G,” Wikipedia, .

[lxix] See, e.g. , “3G,” Wikipedia, .

[lxx] This example is from a conversation the author had on January 30, 2010, with an Illinois resident who utilizes such a system and finds it fast, constant, and fully satisfactory for her rural family of six.

[lxxi] WiMAX, Wikipedia, .

[lxxii] “Satellite Internet Access,” Wikipedia, (including reference to both geostationary and low earth orbit (LEO) satellites).

[lxxiii] Rob Curtis, “The Second and Middle Mile Challenge,” FCC, October 8, 2009, . “The Internet backbone refers to the principal data routes between large, strategically interconnected networks and core routers in the Internet. These data routes are hosted by commercial, government, academic and other high-capacity network centers, the Internet exchange points and Network access points, that interchange Internet traffic between the countries, continents and across the oceans of the world.” “Internet Backbone,” Wikipedia , .

[lxxiv] Both satellites and under-ocean cables are subject to outages from natural and accidental causes, as well as deliberate damage, especially during war.

[lxxv] George Ford, “Network problems cited in Mediacom Internet service outage; Network problems were responsible for a widespread loss of Mediacom Internet service that began Tuesday night,” Gazette Online, January 21, 2010, ; Jordin Ruthstein, “Mediacom Internet outage affects 22 states; Routing issue in Iowa to blame for widespread outage,” Missourian , January 22, 2010, .

[lxxvi] “A week ago we noted that a Mediacom e-mail upgrade promising to deliver ‘next generation’ e-mail service wound up leaving some customers without e-mail for a week. We're now two weeks since the upgrade, and both residential and business users are still writing in to complain that they're either without e-mail service, or they're suffering through oddities like lost e-mail. An ongoing thread in our Mediacom forum has hit 55 pages, most of them filled with customers complaining about the broken upgrade.” Karl Bode, “ Mediacom Customers Still Having E-mail Problems; Weeks after 'next generation' e-mail system went live,” Broadband DSL , December 22, 2009, .

[lxxvii] “Internet Service Ratings (last reviewed February 2010),” Consumer Reports (February 2010), (a subscription service). An even more severe outage problem with bundled services – that is, a single carrier, over a single conduit, providing voice phone, cable television, and broadband Internet – is that when the service really goes out (or goes out of business) the customer loses not one service but all three.

[lxxviii] Vital sign medical monitoring and transmission over broadband are but one example. See, e.g., Eric Topol, “The Wireless Future of Medicine,” TEDMED, TED, filmed October 2009, Posted February 2010, , demonstrating the medical monitoring – some now possible, some soon to be – with an iPhone. Obviously, the impact of outages on this broadband app could be a matter of life and death. And for photos of some of “The Latest Tech,” see LoliTop: The Latest Tech Page, June 29, 2009, .

[lxxix] “Portable phones” connected to landlines do not work when the electricity goes off. Cell phone towers can be knocked out, or effective communication otherwise diminished; and of course when the phones’ batteries run down, and the electric grid is knocked out, they cannot be recharged. Thus, an old-fashioned landline and phone plugged into the wall (to which the landline phone company is providing the necessary electric power) is an essential backup for anyone wishing to handle emergencies under such contingencies (including the ability to report a power outage to the electric company). And see notes 74, 75 and 76, supra.

[lxxx] For the significance of library access to the Internet as of April 2010 see “First-ever National Study: Millions of People Rely on Library Computers for Employment, Health, and Education,” U.S. Impact Studies, University of Washington Information School, April 10, 2010, (last visited May 31, 2010).

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