The Obama administration wants to find ways to deliver subsidized broadband internet to low-income families. It's a nice idea. But the truth is that poor people have trouble affording all kinds of things — that's the definition of being poor. The striking thing about broadband in America is how bad the value proposition for middle class Americans is.
And a read of the excellent October 2014 "Cost of Connectivity" report from the New America Foundation makes it clear what the solution should be. Start with the good news it offers for the United States: in a handful of cities, Americans are enjoying world-class speeds:
And the prices are pretty darn affordable:
This achievement is really impressive when you consider that Chattanooga, Kansas City, and Lafayette aren't even remotely as dense as Seoul or Hong Kong or Tokyo, which get similar speeds. When we put our minds to it in this country, we can do great things. And what works for Chattanooga could work even better in bigger cities like Chicago or Miami.
But there's a catch. The American cities that are delivering best-in-the-world speeds at bargain prices are precisely the cities that aren't relying on Verizon, AT&T, Comcast, Time-Warner, etc. to run their infrastructure. In Kansas City, Google built a state-of-the-art fiber optic network largely just to prove a point. In Chattanooga and Lafayette, the government did it. At the moment, the US federal government could issue 5-year bonds at a 1.58 percent interest rate and make grants to cities interested in following Chattanooga and Lafayette down that path. But it doesn't happen, because while broadband incumbents don't want to spend the money it would take to build state-of-the-art fiber networks, they are happy to spend money on lobbying.
And they are very effective at it. The 2009 stimulus bill, for example, provided a grant to the District of Columbia to build a publicly owned fiber-optic network, but the city's not allowed to use it to deliver fiber connections to its residents. In San Antonio, the city-owned electrical utility already built a fiber network but lobbyists got the state legislature to pass a law making it illegal for households to use the fiber.
So even though we have the technical ability to deliver cheap, super-fast internet and we have the financial ability to finance the construction, we don't actually have the network. In fact, we're so in hock to the interests of the broadband incumbents that we don't even use all the fiber networks we've already built.