In the midst of all the recent talk about Net Neutrality – and with it peering agreements between Internet service providers, content providers, and upstream network operators – lies a stark and disappointing truth: the US telecommunications infrastructure is woefully out of date.
If the “last mile” of the internet were converted to fiber optic cable, the overwhelming popularity of streaming services like Netflix and Youtube wouldn’t be a problem at all. This may be utopian thinking, but there is reason to believe the upfront cost of such a build out could be a sound investment.
A report released today by Standard & Poor’s details the net economic benefits of infrastructure projects, concluding that they routinely outweigh short-term costs. While the report focused specifically on highway construction, its author, Beth Ann Bovino, told Pando this morning that the “fiscal multiplier effect should hold true for other types of infrastructure improvement as well.”
As one looks across the country for a way forward, there are two names that jump from the pages of history to weigh in, and they both end in Roosevelt.
First, Franklin Delano. He was the driving force behind the Telecommunications Act of 1934, which created the FCC as a single regulatory body with the power to regulate all industry related to communication by wire, radio, telephone, and broadcast traveling across state lines.
Though the Act was amended by the subsequent Telecommunications Act of 1996 to more clearly define the way the Internet is regulated, FCC Chairman Tom Wheeler has faced recent pressure to classify ISP’s as “common carriers,” a power granted him by the 1934 law and upheld by a federal court this January. Such a classification would give the FCC more leeway in regulating the economics of Internet service provision and place a higher burden of compliance on ISP’s. Interestingly, the “common carrier” designation is based on earlier antitrust laws written to regulate steamships and railroads.
And then there is Tennessee. The state currently boasts eight municipalities with publicly owned, ultra-high-speed broadband service. By way of contrast, Google Fiber has connected two cities with such service, and is at work on a third. Tennessee has a significant head start – all thanks to FDR and the New Deal.
The Tennessee Valley Authority was conceived at the same time as FDR was laying the groundwork for the FCC. The TVA was originally created to spur economic development by, among other things, generating and distributing hydroelectric power throughout the state and building the power grid. The legacy of that action has allowed cities such as Chattanooga and Clarksville to construct and finance fiber-optic networks that connect directly to the home, a holy grail for “last mile” infrastructure improvements, beating nationwide incumbent providers like Comcast and AT&T to the punch and chiseling deep into their market shares in the TVA zone.
The build out of these fiber grids began in the ‘90s when municipal electricity companies made “smart grid” upgrades to their existing power systems, and their expansion was funded through revenues from the electricity side of the business. Now those internal loans are being paid back and the excess revenues from the communications side are subsidizing rates for electricity.
For major private sector ISP’s like Comcast and AT&T, infrastructure improvements can be a tough sell to shareholders because they require hefty upfront costs. And there have been several cases in the US where these incumbents have been accused of delaying upgrades in order to improve their bargaining positions with higher-tier network operators. Level 3, one such operator, detailed this situation today in a blog post on their site, writing:
[Level 3 has] six peers with congestion on almost all of the interconnect ports between us. Congestion that is permanent, has been in place for well over a year and where our peer refuses to augment capacity. They are deliberately harming the service they deliver to their paying customers. They are not allowing us to fulfil the requests their customers make for content.
Five of those congested peers are in the United States and one is in Europe. There are none in any other part of the world. All six are large Broadband consumer networks with a dominant or exclusive market share in their local market. In countries or markets where consumers have multiple Broadband choices (like the UK) there are no congested peers.
The other Roosevelt who may be soon be due for recognition as an Internet pioneer is Teddy, as a 1902 statute from Washington D.C. has recently been getting a lot of attention from publicly-owned broadband advocates in that city. The obscure law from deep within the city’s public utilities code requires that any conduit (at the time of its writing, this reference was to telephone wires) that is laid in the District of Columbia must build in extra space for government-owned wires. Originally, this public wiring was intended for the limited purposes of “fire alarm and police patrol”, but this language was changed in 2005 to read “for purposes related exclusively to the government and public safety.”
Sources in the DC city government say that this law is receiving a good long look by those who favor building a municipally-owned fiber grid there, though details of talks have yet to emerge. No major US city has yet established a publicly-owned broadband network, though Seattle, Chicago and Portland,OR, have explored the idea.
As our government considers the future of internet regulation It’s important to remember that, although the technology in question is new, the business practices that have grown up around it are not. The 20th Century has a lot of guidance to offer those who hope to see the US bring its communications infrastructure up to 21st Century standards.
We’ve seen the level of service degraded when it’s all about the Benjamins. Now maybe its time to give the Roosevelts a shot.
[illustration by Brad Jonas for Pando]