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The City Lights Reporter

 Online News Journal

May 2002 -Volume 5 Issue 3

Promises Promises
Is Broadband Dead Or Alive

By; James I. Neusom, II

Have you seen the new Samsung commercial on CNN promoting all the multimedia services that their digital devices can deliver?  I know you've received a letter, an email or seen a banner ad on DSL and Cable modems.  Everybody pushing the promises of Broadband or high speed data, but is it real or is it Memorex?  

With universal deployment of high speed data via DSL phone lines, Cable modems and Satellite dishes stuck in neutral, now even the consumer electronics industry has jumped on the broadband bandwagon.  FCC Chairman Michael Powell has stated that his goal was to make the United States the most wired nation in the world.  That goal has become an uphill battle in this economy.  Has anybody else noticed that Enron, Global Crossing, and WorldCom are all communication companies built on the promises of broadband high speed data.

A report on the impact of broadband services on economic growth raised some eyebrows because of the conclusion that the U.S. could lose as much as $500 billion a year in "potential economic benefits" because of a slowdown in the rollout of broadband offerings to consumers. But a coauthor of the report admits that some of the report's underlying assumptions aren't based on direct evidence. The report, from Criterion Economics (a Washington based consulting company), points to shopping, entertainment, telecommuting, telecom services and telemedicine as contributors to broadband's economic benefits. But Charles Jackson, an engineering consultant who coauthored the report with Bob Crandall, an economist at the Brookings Institution, admits that there is no direct evidence to suggest that today's broadband users are reaping such benefits.  That reminds me of the Killer App theory where, they say that residential broadband will never take off until a killer app comes along. That kind of thinking was the death of Dot.com and will do the same to broadband.  Give consumers lighting speed and a persistent connection, and they'll discover a Killer App on their own.

Now based on the promises and the hype, a growing number of economists, industry leaders and government policy-makers are pushing just about any incentive that might jump-start new network initiatives or build-outs.  For example the FCC has moved to spur competition between phone and cable companies by tentatively redefining DSL as an "information service" rather than a telecom service. Like it or not, the Bells are right in the middle of the broadband battle. In its broadest sense, the competition has boiled down to the Bells and the cable providers, leaving broadband satellite and wireless as niche markets.  Now, even the journals of conventional wisdom are catching up to the facts. In a WorldCom article in the New York Times by Seth Schiesel, it was said:  With dozens of other telecommunications upstarts now bankrupt, WorldCom's mounting problems make it increasingly likely that the dominant players in the telecommunications industry may be the remaining offspring of that old antediluvian Bell System: the local telephone giants like BellSouth, SBC Communications and Verizon.  

Rep. Billy Tauzin (R.-La.), chairman of the House Commerce Committee and sponsor of the Tauzin-Dingell bill,  likes to explain broadband to his hunting-camp buddies as a cold, immediately available beer — as opposed to dial-up, which is a sort of near-beer you have to wait an hour to get.   Many of us had hoped that government intervention would not come until more competition had been squeezed out of the industry. But it's looking as if that's not going to happen. Barring a major decrease in Bell momentum, competitive carriers who want to take on the Bells are going to have to do it head-to-head, with war chests suited to the battle.  Although the combined subscriber count for wireless and satellite broadband services grew by more than 70% over the past several months, the two services still account for less than 2% of the U.S. broadband market, according to a Federal Communications Commission study released Aug. 9.

According to Meg McGinty a senior writer with The Net Economy (www.theneteconomy.com), "dial-up Internet service providers have been living on borrowed time for a few years now. With online households reaching the saturation point and broadband services showing impressive growth, it's just a matter of time before dial-up ISPs see their business evaporate.

Or so the logic goes.

Never mind that the 69 million users still hooked into the Internet account for about 87% of the nation's online subscribers, or that take rates for cable and DSL service have been quietly disappointing. With broadband subscriber growth at 62% last year and dial-up at a measly 1%, dial-up ISPs have to make the transition to broadband service to survive.

Or so the logic goes.

"Time is of the essence," says David Epstein, CEO of Connecticut Telephone, a wireless operator that also offers wire line DSL service in Connecticut. "It's a real challenge to get a user back once he's signed on with another provider."

The top five dial-up ISPs — America Online, Microsoft Network, United Online, EarthLink and Prodigy — are at various stages in executing their respective broadband strategies. So far, only Prodigy — which is owned by Bell company SBC Communications — has converted a significant portion of its customer base to broadband."  (see full article at www.theneteconomy.com)

All this fuss over broadband might seem strange to professionals accustomed to the world of T-1, T-3, Synchronous Optical or Gigabit Ethernet Networks at work, with their always on and instant access capabilities and features.  But as anyone who experienced the now defunct @home network or even regular cable will tell you, It aint all its cracked up to be when it comes to residential service.  We forget that at work there are invisible, ubiquitous professionals constantly monitoring, adjusting and fine tuning the network.  Cable modem and DSL's speeds are defined by the number of subscribers on any current hub.  The more people that sign up in your apartment building, the slower and more congested your access to the Net becomes.

There can be no doubt that the economic consequences of broadband could be enormous for the country.  Today's standard dial-up speed of 56K bps is hardly fast enough to download large audio or video files. to obtain complicated visual images required for real-time computer games or to conduct advanced e-commerce.  Without universal high-speed access, the evolution of the Internet to its full potential is temporarily blocked, and it contribution to the acceleration in economic growth may soon end.  Universal broadband is not a dot-com issue, nor are it benefits limited to online retailing or electronic deliver of entertainment products.  When you consider the business benefits of videoconferencing, data processing, voice over IP, etc. the effect on the average persons live will be enormous.  Factor in the implications of 3G next generation wireless, Bluetooth and 802.11 WiFi technology and you have the making of another techno boom that can change everything we do and the way we do it.

Yes, government regulation is needed, but too often government is short sited. Many aspects of universal broadband are tied to regulation, oversight and laws that are outdated almost as soon as they're enacted.  The FCC redefinition was a first step and the bills in the US House and Senate are a good start, but not enough. We need to call on government and industry leaders to set a national goal of making the United States the most wired nation on earth.  Currently we rank seventh in the world, far behind Asia (number 1) and Europe.   We need to mobilize all segments of American industry and society to make a "Broadband Nation" a priority similar JFK's call for a man on the moon.  We need to stop talking about promoting broadband and start acting on making affordable universal broadband assessable to everyone.

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