[IP] more on Om Malik on: Shrinking consumer broadband choices?
Begin forwarded message:
From: david.e.young@xxxxxxxxxxx
Date: October 15, 2004 1:20:22 PM GMT+01:00
To: dave@xxxxxxxxxx
Subject: Re: [IP] Om Malik on: Shrinking consumer broadband choices?
Hi Dave,
I'm sure you will not be surprised to see that I disagree with the
assessment below on a couple levels. First and most fundamentally, one
of the reasons we have a lower percentage of broadband internet users
in the US is because of the availability of very cheap dial-up internet
access which was enabled by the fact that local telephone calls were
'free' (i.e., not charged per minute of use). If you look at many of
the countries with the highest percentage of broadband users, you will
frequently find that local phone calls are metered and dial-up internet
access never took off. The availability of reasonably priced broadband
then is a no-brainer compared with expensive dial-up and you see the
large majority of internet users in those countries choosing broadband.
In the US however, low cost dial-up is still a rational alternative for
the most cost sensitive consumers. Things like voice and video over IP
which can be delivered inexpensively over broadband connections (but
not over dial-up) is likely to tip the scales and accelerate the
substitution of broadband for dial-up.
Regarding competition between the two primary broadband technologies in
the US, there is no 'cozy duopoly' that I'm aware of. I see intense
competition with prices declining, speeds increasing and extra services
added constantly. For example, Verizon's entry-level DSL has gone from
a 768k down and 128k up to 1.5M down and 384k up (double the
downstream, triple the upstream). At the same time, the price has gone
from $60 per month when we first launched the service 6 years ago to
under $30 per month today. Likewise, cable has been forced to respond
by raising speeds and lowering prices as well. And we are now kicking
up the competitive pressure on cable even more as we roll out fiber to
the home to provide even higher speeds in both directions, the ability
to provide true video competition for cable and a future-proof platform
capable of delivering whatever speeds are eventually required by
customer applications.
Finally, I see 50% internet penetration in the below $30k demographic
as a very encouraging statistic. As stated before, dial-up is a
rational economic choice in the US for the most cost sensitive
consumers. However, there are many barriers to internet access for
many lower income families beyond the cost of broadband. Computer
ownership is a key gating factor, as are education and literacy.
Addressing those issues will be key to bringing on board the other 50%
of lower income families.
-David
--------------------------------
David E. Young
Director, Internet & Technology Policy
Verizon Communications
1300 I Street NW
Washington, DC 20005
+1 202-515-2425 <Office>
+1 202-365-4755 <Mobile>
+1 202-336-7923 <Fax>
david.e.young@xxxxxxxxxxx
"David Farber" <dave@xxxxxxxxxx>
Sent by: owner-ip@xxxxxxxxxxxxxx
10/15/2004 03:48 AM
Please respond to dave
To: "Ip" <ip@xxxxxxxxxxxxxx>
cc:
Subject: [IP] Om Malik on: Shrinking consumer broadband
choices?
[Note: This item comes from reader Robert Berger. Actually, the ITU
now rates the U.S. # 13 out of the top 15 countries in terms of
broadband penetration. DLH]
> From: "Robert J. Berger" <rberger@xxxxxxx>
> Date: October 14, 2004 6:23:00 PM PDT
> To: Dewayne Hendricks <dewayne@xxxxxxxxxxxxx>, Dave Farber
> <dave@xxxxxxxxxx>
> Subject: Om Malik on: Shrinking consumer broadband choices?
>
> Shrinking consumer broadband choices?
> http://www.gigaom.com/2004/10/shrinking_consum.php
>
> FCC's decision to extend monopolistic control over the last mile
> has The Consumer Federation of America and Consumers Union all
> riled up. They are worried that lack of competition will only
> increase prices, limit choices, and result in slower
> innovation. "The FCC today took our country one giant step
> closer toward solidifying a two-company domination – the local
> cable and telephone providers -- over the consumer Internet
> market," said Gene Kimmelman, Senior Policy Director for
> Consumers Union. "As both industries tighten their hold on
> high-speed Internet (broadband) access, consumers will see their
> choices diminish and their bills skyrocket." "This stranglehold
> will stifle innovation as these duopolies discriminate against
> unaffiliated applications and services that in the past have
> driven the growth of the Internet and the boom in information
> technology," Mark Cooper, Director of Research at the Consumer
> Federation of America, said. "As a result, our country will fall
> even farther behind Asia and Europe in broadband penetration."
>
> I agree. FCC is beholden to special interest groups, and has
> lost all veneer of fairness. Michael Powell thinks that also-ran
> technologies like WiMAX and Broadband over Powerlines will
> result in competition, and once again shows that despite his
> self professed love for gizmos, he really doesn't have a grasp
> on technological realities. I think it is time that consumers
> get to elect FCC commissioners, via the local ballet. No
> political appointments for this most important body, which is
> chartered with coming up with unbiased, fair and realistic
> regulations that affect consumer lives in the future. I think
> broadband and wireless networks are going to be a key to our
> future and global competitiveness, and FCC is selling it down
> the pike. Here is a recent FCC reality check:
>
> • In the three and a half years that Michael Powell has
> been Chairman of the Commission, the U.S. had fallen
> from third to eleventh in broadband adoption.
>
> • As a result, the digital migration that Chairman
> Powell has touted has become a migration to a massive
> digital divide. One out of every two American households
> with incomes above $75,000 have high-speed Internet
> connections at home. One-out of every two American
> households with incomes below $30,000 does not have any
> Internet connection at home at all.
>
> • The cause of the failure of high speed adoption is
> clear, Americans are being overcharged by the cozy
> duopoly of cable and telephone companies. Cross national
> comparisons of price show that Americans pay fifteen to
> ten times as much, on a megabit basis, as consumers in
> Japan pay. Three years ago the price in America was
> three or four times as high.
Archives at: <http://Wireless.Com/Dewayne-Net>
Weblog at: <http://weblog.warpspeed.com>
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