Subject: [NEXTEL-1] Let's Underwrite Broadband

From: Marcel <[email-masked]>
Date: Wed, 22 Jan 2003 15:40:11 -0500

-------- Original Message --------
From: [email-masked]
Subject: Let's Underwrite Broadband

http://www.business2.com/articles/mag/0,1640,46180,00.html

Let's Underwrite Broadband
Every American home should be connected to the information superhighway. The 
problem? The toll is too high. Ten bucks a month from Uncle Sam will help. 
By Ned Desmond, February 2003 Issue

It's time for the U.S. government to subsidize broadband connections to the 
home. I never thought I'd say that, but I've gotten over my free-market 
puritanism. The Bush administration should write a check to cover about a 
quarter of the $40 per month that households pay for their cable or DSL 
connections, and be ready to pick up even more if Americans don't get with 
broadband fast enough. 

The idea comes from Reed Hundt, former chairman of the Federal Communications 
Commission, who now consults on telecommunications and works as a venture 
partner at Benchmark Capital. You probably remember Hundt for his elegant if 
controversial efforts to use regulation as a way to create more competition and 
lower prices for broadband, among other services. The telecom implosion 
interrupted that experiment, and today the surviving providers of cable and DSL 
service can't drop prices below the $40-to-$50 range and cover costs. That's 
too steep for most families. 

So forget about elegant regulations, Hundt argues. Let's follow the proven, all-
American approach of using taxpayers' money to underwrite a civic and economic 
good. "Broadband is like paper or clay," Hundt says. "It will be written upon 
by any number of value providers -- just like TV was." The United States will 
lose a critical part of its technological leadership if it can't find a way to 
increase the broadband penetration of American homes. 

Just 16 percent of U.S. households now connect through a big pipe, compared 
with 35 percent or more of those in South Korea, Taiwan, and Hong Kong. And 
we're falling further behind every year. The rate of growth in countries as 
diverse as France and India is far greater than in the United States, where no 
more than 33 percent of households will have broadband by 2006. In South Korea 
the government set up a three-way competition among phone, cable, and power 
companies to outfit consumers with broadband. The result: Consumers pay $25 a 
month, on average. More than half the homes in South Korea that can get 
broadband do so, and the government recently lent broadband providers $120 
million to reach the remaining 45 percent that lack connections for high-speed 
Internet. Broadband will be a giant engine of commerce that creates businesses 
we can't even imagine today. TeleNomic Research in Virginia, for example, 
estimates that if we got most of America's households online we would see 1.2 
million new jobs -- 230,000 in the telecom sector alone. The Brookings 
Institute projects $500 billion in economic growth. 

Broadband will do for the economy what the railroad, electrification, 
telephone, and interstate highway systems did in their own times. They created 
new industries, and so will broadband in arenas such as security, education, 
health care, entertainment -- and others we can't fathom. 

There are countless proposals to stimulate broadband adoption stacked up over 
Washington, but none share the simple directness of Hundt's proposed subsidy. 
Use tax dollars to knock subscription rates down to $30 per month and 
subscriptions will increase. We've seen that price-subscription rate two-step 
with other technologies, such as telephone and cable TV. 

How much will this cost taxpayers? About $6.6 billion per year, assuming 55 
million households sign up. Hundt proposes that Washington start slowly and 
provide an average of $10 per month (the amount could vary with household 
income), and then increase it as necessary until broadband reaches 60 percent 
of households -- roughly the same percentage that have PCs. Whether it's $6 
billion or $18 billion, the sum is modest by the standards of Washington's 
favored projects. For example, FCC and state regulations subsidize local phone 
service to the tune of $30 billion a year. Our interstate highway system, which 
President Eisenhower kicked off in 1956, cost $330 billion by 1996. Both 
examples provide priceless social and economic dividends. So will broadband.

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From: "Thomas Conlon" <[email-masked]>
Date: Wed, 22 Jan 2003 16:28:39 -0500

UH, my main interest lately is how incumbent CATV providers will be
'convinced' to provide access to the cable plant, similar to type II
leasing now at your friendly local CO.  I have no clue how that all
works for wireless voice.

I did see a recent news blurb on Channel 13 or something regarding the
FCC saying that Lucent and the rest of the American R&D and equipment
manufacturing sector etc. will be a dead issue unless people are forced
to implement their own infrastructure and access path to the end-user
ie. The Customer's living room.  Obviously VOIP is the value-add plus a
dumb box for WebTV'ers (or some good ol' fashioned GigE).

Now without going back to the 30's and seeing the telephone wires
blackening out the sun, or more realistically, getting shut out by local
councils, zoning boards, highway maintenance departments, and lawyers
from ILECS and CATV co's, what is the answer?  Obviously it is the old
TCG watchphrase "fiber to the curb" but that ain't gonna be easy.  Here
in NJ there is no room even it would seem for more wires and doodads (or
even cell towers -- unless you are the police department) and Verizon is
not going to play nice, I am sure.  Cablevision?  As they say here
(regrettably) "fuhgeddaboutit."

-tc
[email-masked]

-> 200 yards from VZ's BOS to DC mainline, which I might add, they never
properly paved over
-> 20,000 feet from the CO.
Can you say iDSL?