ON BROADBAND AND OIL

OUT OF THE BOX

This op-ed in the New York Times emphasizes a point long covered in posts here, that regulatory policies in the U.S. have long hampered the entrepreneurial growth of wired and wireless broadband, especially relative to other countries.  Here's the observation in particular that got my attention:

"AMERICANS today spend almost as much on bandwidth — the capacity to move information — as we do on energy. A family of four likely spends several hundred dollars a month on cellphones, cable television and Internet connections, which is about what we spend on gas and heating oil."

What's interesting is the way the piece tries to make the point, by characterizing the current situation of oligopolistic broadband providers as "OPEC 2.0":

"Like energy, bandwidth is an essential economic input. You can’t run an engine without gas, or a cellphone without bandwidth. Both are also resources controlled by a tight group of producers, whether oil companies and Middle Eastern nations or communications companies like AT&T, Comcast and Vodafone. That’s why, as with energy, we need to develop alternative sources of bandwidth.

Wired connections to the home — cable and telephone lines — are the major way that Americans move information. In the United States and in most of the world, a monopoly or duopoly controls the pipes that supply homes with information. These companies, primarily phone and cable companies, have a natural interest in controlling supply to maintain price levels and extract maximum profit from their investments — similar to how OPEC sets production quotas to guarantee high prices..."

The piece goes on to make a similar point when it comes to wireless broadband, again a subject close to my heart:

"After physical wires, the other major way to move information is through the airwaves, a natural resource with enormous potential. But that potential is untapped because of a false scarcity created by bad government policy.

Our current approach is a command and control system dating from the 1920s. The federal government dictates exactly what licensees of the airwaves may do with their part of the spectrum. These Soviet-style rules create waste that is worthy of Brezhnev.

Many “owners” of spectrum either hardly use the stuff or use it in highly inefficient ways. At any given moment, more than 90 percent of the nation’s airwaves are empty.

The solution is to relax the over-regulation of the airwaves and allow   use of the wasted spaces."

There are of course key differences between oil and bandwidth, and in many ways we're comparing apples and oranges.  But the piece does have a beat, and you can dance to it.

Comments

[Alex Tolley]

"These wireless entrepreneurs could one day liberate us from wires, cables and rising prices."

Utter BS. The author seems to not understand the difference between bandwidth and capacity. The information capacity of radio waves is inversely related to wavelength. But transmission characteristics are also dependent on wavelength.

Fiber optic cable transmits short wavelength light and the capacity is effectively infinite as cables can be strung in parallel without interference. Thus the future of transmission is not by wireless as wavelengths are longer, there is limited capacity dependent on wireless spectrum availability.

Wireless has its place for mobile devices, which will become increasingly important, but it can never compete with fiber for bandwidth and capacity.