Broadband stimulus: look back to understand the promising future
To properly direct the potential success of the federal broadband stimulus, we need to look back before moving forward. Looking back, the need to create greater competition in the United States telecommunications industry was recognized by both the Democratic and Republican parties. The consent decree of 1982 that broke up American Telephone & Telegraph Co. (AT&T) was under the Ronald Reagan administration, while the break up of the Bell operating companies occurred during the Clinton administration in 1996. Deregulation spurred the deployment of fiber optic networks, which helped to fuel the dotcom boom and encourage the funding of technology start-ups all over the country. The networks that were built and the equipment and software required to build them created companies from nothing that became overnight stock market and business successes.
Back in the mid 1980s, phone long distance prices were 40 cents a minute, providing margins capable of supporting the building of more efficient and higher capacity fiber optic networks. There was also a financial market ready to feed these new competitive long distance carriers. As competition increased, the price of long distance decreased, greatly reducing the cost of doing business nationally and internationally. Volume long distance pricing enticed corporations to consolidate, and even entire countries like India saw that low long distance rates could attract vertical markets to their country, such as call centers. The Internet further decreased the cost of doing business internationally and many US companies capitalized on these efficiencies thorough overseas outsourcing.
Investments in the US telecommunications local infrastructure then focused on Competitive Local Exchange Carriers (CLECs) until both the local and long haul carrier markets collapsed and the government stopped protecting new carriers under deregulation guidelines. After these protections were removed, the long distance and CLEC start-ups’ stock prices took a hit, eventually bankrupting many companies and leaving employees of those companies with nothing. The old Incumbent Local Operating Companies (ILEC’s) and AT&T ended up with newly built fiber optic networks for pennies on the dollar.
So where are we today?
Our local access and long haul carriers are run by a handful of companies offering broadband services. We are now 16th in the world’s broadband leaders and our prices are above those in most developed nations. The targeted expanded build outs in rural areas stopped years ago, as did many competitive build outs in urban areas. Most importantly, local markets never really saw competition. Instead we got cable/telco dualopolies in cities across the United States. A lot of hard work from many just to have it all fall back to the same incumbents that stifled the deployment of newer communication technologies years ago is not where we should be today.
I didn’t want to belabor this history, but it is important to learn from the past as we prepare for the future. The broadband stimulus funding is a great opportunity to start where we left off in the days of deregulation. We need to expand the right technologies and applications in the neglected local rural markets, while also focusing on new urban market communication services. This is where the true economic recovery will occur.
Years ago I had a discussion with Peter Marcotullio, the Director of Business Development at Stanford Research International (SRI). The question I proposed to Mr. Marcotullio was where he thought the future growth of the Internet would be. Without hesitation heanswered, “The applications and uses of the local Internet will far exceed the current use of the Internet today.” I have studied the deployment of municipal applications across the world for years and this statement continues to prove true.
It seems odd that we built entire global communication networks all over the world, dropped thousand of miles of oceanic fiber while leaving our local infrastructure under served. But this is exactly what we did. With today’s economic slow down and unemployment, we need to build the networks and applications we did in the global market, this time leveraging our local networks to create local employment while curbing national inflation.
In an earlier MuniWireless commentary, I chose only a portion of one US industry (transportation) to demonstrate the importance of local wireless Internet applications. The example from the Intelligent Transportation Society of America (ITS America) validated job creation by building smart wireless networks along our nation’s highways, while saving a lot of money in healthcare and energy. This could all be done while at the same time, making our highways safer and saving thousands of lives each year.
I understand the broadband stimulus is directed towards rural areas, but we also need to recognize where our biggest bang for the buck is when deploying these local broadband technologies. Transportation applications are just a few examples of the power of the local wireless intelligent Internet. There are hundreds of other applications and efficiencies in countless other local vertical markets.
So, recognizing where we were and where we stopped, we can begin again. We have a big opportunity for employment, reducing costs, offering national security, all while creating thousands of jobs in new industries. The local wireless Internet is where the next wave of jobs, savings, security and profits will occur in the future Internet. Directed properly, the broadband stimulus package could seed this opportunity.
About the author
Larry Karisny is the director of the ProjectSafety Business and Technology Cluster. ProjectSafety is a technology and business non-profit focused on the deployment and future proof testing of municipal broadband wireless networks. ProjectSafety’s unique broadband wireless Community Network Integration (CNI) model addresses both technology requirements and business needs in a single network solution for both the public and private sectors.
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