As I wrote last week, the United States — the country where the internet was invented — now ranks 31st in the world for internet speed, behind such countries as Romania, Estonia, South Korea, and Uruguay.
The fastest internet in the world — namely, in Hong Kong and Singapore — can be found in tiny city-states. But America's geographic bulk isn't necessarily the issue. After all, some relatively large countries, like Sweden and Japan, are way ahead of the United States in internet speed. And Russia — the largest country in the world by land mass and a much poorer country than the U.S. — is level with America on internet speed.
It doesn't have to be this way. The U.S. has some of the fastest commercially available internet connections in the world, such as Google Fiber, at up to 1Gbps, almost 50 times faster than the U.S. average. If just half of homes around the country had access to those kinds of speeds, the U.S. would comfortably be the fastest place on Earth. The problem — and the place where other countries have begun to leapfrog the U.S. — is not developing superfast connections, but making those speeds available to more people.
A bit of history: When President Clinton signed the Telecommunications Act on Feb. 8, 1996, The New York Times reported that the bill "knocks down regulatory barriers and opens up local telephone, long-distance service, and cable television to new competition." For a while, it did. By the year 2000 — thanks to common carriage and line-sharing rules carried over from the telephone industry — there were more than 9,000 internet service providers in America. That meant very robust competition.
Then the Federal Communications Commission deregulated the broadband market with two game-changing decisions. In 2002, it decided not to extend common carrier rules to cable companies. And in 2005, the agency dropped the line-sharing rule for DSL service, following massive lobbying from cable and telecom companies. This meant that broadband infrastructure did not have to be shared with other broadband companies, allowing infrastructure-owning providers to become large monopolies. New entrants to the marketplace often have to dig their own lines. By 2005, the number of internet service providers had plummeted to less than 2,500.
Other countries, such as South Korea, have open access line-sharing rules that require infrastructure to be open to all competitors. This has meant a much more competitive marketplace for the consumer.
Obviously, though, open access line-sharing rules are a disincentive for private companies to build infrastructure. Big broadband companies point this out every time the issue is raised. For private infrastructure to be viable, private companies need to make it profitable, and there's little that's more profitable than a monopoly.
To ensure open access, government has to take on a larger role in providing basic infrastructure. This works well for roads, bridges, dams, sewers, the electric grid, and waterways. In fact, a public road system makes for a more open and competitive economy. If everyone had to pay high levies to use every private road and bridge, that would act as a pretty strong disincentive to intercity, interstate, international commerce. Having widespread, publicly created infrastructure facilitates a free, open market economy.
Similarly, internet access should be considered a public utility, just like water or electricity. The government provides the pipe and guarantees equal opportunity of access to everybody. Government could contract the construction out to private companies like Comcast, Verizon, or Google, depending on who can deliver the best service for the cheapest price.
The cost of nationwide fiber at Google Fiber speeds? According to an estimate by Goldman Sachs, it's $140 billion. That sounds like a lot, but next to other large-scale government ventures, it's very little. The 2008 TARP bank bailouts cost $700 billion, and the wars in Iraq and Afghanistan cost at least $4 trillion! With interest rates on government borrowing remaining near record lows, the market is offering the government cheap money to invest.
The potential for economic growth from such an investment is huge. And not just in the extra jobs created by building the network. With such a huge pipe connecting the country, businesses would make use of the bandwidth, leading to a new slew of products, services, and innovations, just as the rollout of the original interstate highway system did.
The original broadband revolution led to breakthroughs in communications, like the video conferencing of Skype and Google Hangouts; the rich-media delivery of YouTube, Spotify, Netflix, Snapchat, and Vine; telecommuting; online interactive gaming; and cloud computing technologies like iCloud and Dropbox. We don't know what new innovations will come of next-gen fiber connections — but you can bet they will be hugely important. It seems likely, at least, that we'll see the beginning of more immersive online virtual reality environments, intelligent traffic management systems, medical monitoring devices, waste management systems, and next-generation telecommuting and online collaboration tools.
We'll find out soon enough. If it isn't the U.S. that leads this new wave of innovation, it will be other countries that decided to invest heavily in the basic infrastructure to make it possible.
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