Show of hands: How many of you saw Miss California, Carrie Prejean, answer Perez Hilton's question about gay marriage at the Miss USA pageant? For those who answered yes, how many of you saw the video of her on a computer or mobile device instead of a TV? Exactly. That's the power of broadband, and it's the future of the mass media. No surprises there. From iTunes to Hulu, the last few years have seen an explosion of online video, much of it now in HD. The future of online is video, video, video. That future is assured, but there's real danger of that future being delayed, at least in the United States.
You may have heard about Time Warner Cable's plan to introduce metered pricing for broadband access, and its reversal of that plan after it caused an online revolt. TWC's idea was stupidly executed, but in any case it was only a symptom, not the problem. Just like fact that the U.S., the inventor of the Internet, ranks 15th in the world for broadband speeds — that's a symptom, too.
What is the problem? Read on.
Feeding the Broadband Meter
I may have to turn in my broadband-user card for saying this, but caps and metered pricing are actually reasonable measures for an Internet service provider (ISP) to take — in theory. It's certainly true some people use the Internet a hell of a lot more than others, and if you need to get online only to check e-mail and watch clips like the one Miss California one, why should you pay the same as someone running a video hub out of his house?
But I have serious, in fact deal-breaking, problems with how these measures have recently been proposed by American Internet providers. First, it's becoming more apparent every day that having cable companies in the broadband game is a conflict of interest. How can Time Warner Cable be taken seriously about providing broadband Internet — and all the video services that are driving it — when its bread and butter is getting you to watch cable TV? It's like having Ford control the highways — a blatantly anticompetitive arrangement.
My other problem with tiered service is the pricing, at least the pricing seen so far. When Time Warner unveiled the details of its pricing plan, the country did a collective spit take, and with good reason. It was a joke, massively underestimating typical home Internet usage. Take the commenter Lohan on this story (scroll down), a guy who lives in New York City with two roommates: Between the game consoles, PCs, iPhones and media receivers, they would burn through even TWC's most generous broadband caps very quickly. These aren't BitTorrent pirates or home businessmen — they're just regular consumers of media who happen to be living in the 21st century. What century does Time Warner think it's living in, I wonder?
Still think that TWC's pricing might be reasonable, given the explosion of broadband use in recent years? Forget for a second that Internet users in Japan pay less than we do for the fastest Internet speeds in the world, and instead look at Wilson, North Carolina. In this town, where Time Warner Cable and Embarq refused to provide faster access for its residents, the City stepped in. Creating a service called Greenlight, Wilson set up faster service, charging less than similar, slower plans from the two companies. The story is ongoing — Embarq and TWC are predictably taking legal action to get Greenlight shut down.
There are arguments against having a government-run Internet provider. I happen to agree with a lot of them. I don't think turning Internet access into a public utility is the answer. But what's happening in Wilson is informative of what's wrong with the marketplace. Existing law and this kind of corporate bullying (enabled by lax or corrupt politicians) have created a market that suffocates competition. Think about how many options you have for broadband. Compare that with those available in Tokyo: Residents can choose from NTT, OCN, J-Com, YahooBB, KDDI's AU One Net, Fusion Gol, and others. Where does Japan rank again in Internet speeds and price? Oh yeah, No. 1. (Here's that PDF again.)
Tomorrow's Internet: Expect Delays
And the Time Warner story keeps getting worse. Follow: DOCSIS 3.0 is a new broadband technology that can increase cable-modem connection speeds while being relatively inexpensive to implement, according to this New York Times article. Current cable modems use just one channel in a provider's lineup; DOCSIS 3.0 uses several. I don't know about you, but I'd certainly be willing to do away with a few — or even a few hundred — of my thousands of cable channels if it meant get blazing fast Internet speeds. But now TWC says it will probably delay the deployment of DOCSIS 3.0 after its tiered-pricing initiative went over like New Coke. How does it get away with this? Quite easily: In many markets, the company has no real competition.
If the market were truly competitive, Time Warner's tiered-pricing plan wouldn't have met with so much outcry. In fact, it wouldn't have happened at all (or happened in a radically different way) because its customers would have merely switched to another provider, one with better service at a lower price. But in many areas, TWC is the only true-broadband game in town — just read this Time Warner story from commenter Michael and try not to seethe with anger. Verizon's FiOS offers a great alternative, but it doesn't reach that many areas yet, and it's slow to expand.
The recently passed economic stimulus bill provides some serious cash for beefing up U.S. broadband, but this is a classic case of throwing money at the problem. The issue with broadband in America isn't that some remote areas need better access (which is the primary target for the cash); the problem is that the whole system is anticompetitive, with consumers typically limited to one or two choices for true broadband access. Only by opening up the market, cracking these monopolies, and removing blatant conflicts of interest will U.S. broadband truly move forward. Which is to say move at all.