The Fiber Formula

In part three of Saul Hansell’s series on broadband in the Rest of the World, we learn that taxpayers in the fiber havens are doing all the heavy lifting:

But the biggest question is whether the country needs to actually provide subsidies or tax breaks to the telephone and cable companies to increase the speeds of their existing broadband service, other than in rural areas. Many people served by Verizon and Comcast are likely to have the option to get super-fast service very soon. But people whose cable and phone companies are in more financial trouble, such as Qwest Communications and Charter Communications, may well be in the slow lane to fast surfing. Still, it’s a good bet that all the cable companies will eventually get around to upgrading to the faster Docsis 3 standard and the phone companies will be forced to upgrade their networks to compete.

The lesson from the rest of the world is that if the Obama administration really wants to bring very-high-speed Internet access to most people faster than the leisurely pace of the market, it will most likely have to bring out the taxpayers’ checkbook.

None of this should come as a surprise to our regular readers. Businesses invest in fiber infrastructure on a 20-year basis, and government subsidies can compress the investment timeline to one tenth of that. And Hansell finds that a lot of the foreign spending is driven by nationalist pride rather than more prudent factors. The problem I have with massive government spending on ultra-highspeed fiber projects is the conflicting priorities. I like fast networks, but I know that my tastes and interests aren’t the universal ones. And then there’s the question of utility: mobile networks aren’t as fast as locked-down fiber, but they’re an order of magnitude more useful.

So why don’t we strive to make the US number one in wireless, and leave the fiber race to the smaller nations? The long-term benefits of pervasive, high-speed wireless are much greater than those of heavily subsidized (and therefore heavily regulated) stationary networks.

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