Talking telecoms

Peter Suderman questions whether Japan's broadband is really 8-to-30 times faster than ours.

The article he references is a little misleading; it compares the best broadband available in Japan (100 mbps) to the average in America. But America has fiber to the home to, and the comparison is considerably less invidious; we just have less of it, because it takes longer to build out a fiber network for a country with an average population density of less than 3000 people per square mile, than it does in a country where the population density hovers around 12,500 people per square mile. The article spends a lot of time focused on telecoms policy, when awesome telecoms policy is not going to give us better geographical conditions, or a newer copper network.

That said, better telecoms policy would give us competition for services, something sorely needed. Forget high speed internet; how come the government protects Comcast's right to be my sole provider of surly, desultory cable service? These days, it seems like the only hope is that the cable companies and the baby bells will meet on some windy plain, like Mothra and Godzilla, and destroy each other.

Update I grabbed the density figures off an internet site, and either read them wrong, or used a bad site. Commenter Internet Ronin says:

For the record, according to the United Nations, the correct numbers for population density for the United States and Japan in 2005: 31 people per square kilometer in the United States and 343 people per square kilometer in Japan. Japan ranks #30 out of 230 nations/territories while the United States ranks #172.

That doesn't change the point, of course; in fact, it rather augments it. But accuracy counts.

Comments

One solution: Leapfrogging...

What Asia has done with wireless telephony - the US will do with wireless broadband.. from copper to wireless..

All the wireless operators do not know it yet - but they are actually ISPs.. well actually - from what I can tell is going on in Europe - they know it but have cartel like agreements not to roll out too fast with the wireless broadband flat rate? (Like the music business?)

In countries like Austria - wireless broadband modems are booming (they get several Gs per modem) and are most of the time used to connect desktops - not even notebooks...

this is why the EU only now lowered wireless roaming tariffs.. because all there is left are wireless ISPs (and Google Local, Skype, Newsreader on your mobile and on your PC..)

Who will be the first one to offer a flat-rate on nationwide wireless broadband (who cares if you use it for your car, notebook, phone, microwave.. speaking of microwave - there will be some sort of happy vibration in the air?)

I think that Paul Allan of Microsoft once founded a start-up in California.. I used their services until it went broke.. too early at the time as the US was still catching up on wireless telephony compared to the EU and Japan..

Posted by Hugo Pottisch | August 30, 2007 2:08 PM

Well, there's the rub for Libertarians: businessmen HATE uncertainty. As soon as they achieve a dominant position, they use any available tactic to lock in a permanent advantage, including arson, blackmail, book-cooking, bribery, price-fixing and many other unsavory methods. Absent a healthy society and a vigilant government, the transition from efficient private-sector enterprise to criminal conspiracy is as inevitable as the setting of the sun.

Megan's notion that there will be steady bubbling of new telecom players to keep the free market waters clean and oxygenated is not at all a natural result of unfettered markets. In Mexico, the richest man in the World, Carlos Slim, personally owns the telecom market. He bribed the Mexican government to sell it to him, and now he controls 90% of the phone service in Mexico.

A few more years of BushCo-style rule, and we would have our own Slims in every major industry segment. Ultimately, libertarians should be much more focused on the fine-tuning of regulatory bureaucracies than on efficient market mechamisms, becuase this is considerably more difficult than running a market-based company. The unfettered market is just as sure a path to oppressive control of goods and services as the command economy of a totalitarian state. It was the unique goal of BushCo to combine the worst aspects of both models.

Posted by HH | August 30, 2007 2:12 PM

The telcos and cable companies are clearly guilty (at least) of misdemeanors against humanity.. Some crusading judge, somewhere, should indict them.

Posted by MattF | August 30, 2007 2:13 PM

HH,

What do businessmen and George Bush have in common with libertarians? Big businessmen (unlike some small busniessmen) are not libertarians. No one ever considered George Bush a libertarian.

Please explain how you can lump all of them together. Libertarians I know believe in legalizing drugs, personal freedom, economic competition, etc.

Where do you stand on all those issues? You may be closer to being a libertarian than you think. Certainly, there are few people father from the libertarian philosophy than George Bush or a Fortune 500 CEO.

Posted by jbb | August 30, 2007 2:29 PM

HH

I don't know what you are talking about but new technologies emerge very quickly and so called tycoons falter and emerge very quickly as well..

do you actually recall a world without wireless telephony, or internet? no - it happens very quickly.. and yet when consumer see something for the first time there is natural resistance and only early adopters and.. there needs to be time to break even with older innovations..

As MattF said.. The telecoms and cable companies are clearly guilty (at least) of misdemeanors against humanity.. Some crusading judge, somewhere, should indict them.

You HH should be the first activist to boycott your greedy ISP business.. show them who they are dealing with and go offline!

And it is not true that business men hate uncertainty.. where do you get this from? They prefer a financial environment of growth and low inflation and and and but they are generally risk takers and uncertainties during technological paradigm shifts usually pose great opportunities.

Small companies can emerge because large dominant companies act in a protectionist matter and refuse change.. if the large company stays open and adjusts to the change - it does not matter to the consumer - there will be, at least in high-tech, somebody to fill the gap.. Where was Google a few years ago?

And where is Mexico.. oh my god - they moved from only one state-monopoly to a cartel... I understand that your laizzes fair instinct wants even more competition and free market dynamics - but it is a step in the right direction?

Posted by Hugo Pottisch | August 30, 2007 2:32 PM

"Forget high speed internet; how come the government protects Comcast's right to be my sole provider of surly, desultory cable service? "

Don't you have an option to get "cable" through Verizon's FiOS where you are? I thought they had all of DC and the inner 'burbs covered by now.

Posted by Njorl | August 30, 2007 2:33 PM

MattF wrote:

"The telcos and cable companies are clearly guilty (at least) of misdemeanors against humanity.. Some crusading judge, somewhere, should indict them."

What the heck is a misdemeanor against humanity? A crime against humanity is something like slavery or genocide. Clearly the idea that comcast, for as expensive and crappy its service, is somehow even in the same sport as crimes against humanity is just silly.

Comcast and the other cable companies are fantastic at avoiding competition with each other and providing just enough service to keep its customers from abandoning cable services completely. This is the same winning forumae for the telephone companies. But it is very hard to see what can be done about it. Cable infrastructure is expensive, and the magic competition pixie dust doesn't work well on problems in which the possibility of competition is so remote because of huge barriers to entry. I mean, what am I to do if I want to compete with comcast? Lay down duplicate lines all over their service area? Not only would it be incredibly expensive, but it would also be an unnecessary duplication of infrastructure.

And so.... the dreaded regulatory framework rears its ugly head. We either wait around until someone invents a new method of delivering cable content that is affordable (like wireless broadband service with all the bells and whistles) or we try to come up with a regulatory scheme via which companies compete for customers, and the infrastructure is controlled by a semi-public company, and rents out the lines to whoever wants to use them.

Could such a semipublic scheme work? Well, it works pretty darn well for Teh InterWeb.

Posted by szr | August 30, 2007 2:34 PM

Hugo,

I think (without speaking for him) that HH may mean large businesses when he speaks of businessmen as being risk-averse. Sometimes in the pro/con free enterprise discussion, it becomes easy to forget that there is a HUGE difference between entrepeneurs who start businesses and business executives who run large organizations. The former respond well to risk, the latter do not.

That is why in an open system, creative destruction inevitably destroys big business over time. The challenge is keeping the system open to prevent established businesses from using the political process to game the system.

Posted by jbb | August 30, 2007 2:38 PM

It was a joke. I rather doubt that there is, in fact, such a thing as a misdemeanor against humanity, even in international law.

Posted by MattF | August 30, 2007 2:38 PM

This comment deleted for invoking the dread "S-word"

Posted by Hugo Pottisch | August 30, 2007 2:56 PM

Well, there's the rub for Libertarians: businessmen HATE uncertainty. As soon as they achieve a dominant position, they use any available tactic to lock in a permanent advantage, including arson, blackmail, book-cooking, bribery, price-fixing and many other unsavory methods. Absent a healthy society and a vigilant government, the transition from efficient private-sector enterprise to criminal conspiracy is as inevitable as the setting of the sun.

Or they go the easiest and most common route and get high legislative barriers to entry into the market created "for the public good". Which happenst to be exactly what the telecos and cable companies did.

Megan's notion that there will be steady bubbling of new telecom players to keep the free market waters clean and oxygenated is not at all a natural result of unfettered markets.

Well, there was a similar situation with long distance telephone service. Simply revoking the legislative monopoly in 1970 lead to an 8% loss of AT&T's market share (AT&T at that point still controlled all the infrastructure), and when the regional Bells were split off. From that point on, AT&T's market share (no longer bolstered by controlling the local infrastructure as well) dropped to less than 50% and no company has been able to establish anything similar to AT&T's initial legislatively created monopoly since (stats from here).

So, in short, yes, the repeal of legislative monopolies (especially when related monopolies on infrastructure aren't preserved) will increase competition. Monopolies are unstable equilibria, which is why they are most commonly products of legislative barriers to entry.

Posted by MattXIV | August 30, 2007 2:56 PM

Hugo's notion that big companies are good for small companies does not seem to be supported by historical evidence. Big companies ignore small companies - until they are perceived as a threat; then they proceed to cripple them or snuff them out. (E.g., Microsoft/Netscape).

In a corrupt political landscape, the big companies have an overwhelming advantage, because they can stuff cash into the pockets of the politicians. Currently all the big US telecom providers are lobbying for permission to provide different classes of service for Internet traffic, allowing them to charge premiums for "expedited" delivery of favored traffic and to throttle back the throughput of less-favored entities.

Libertarianism resembles a quaint hobby, like running model trains. It is satisfying, as long as one does not look beyond the train set. The world we live in is considerably more difficult to manage.

Posted by HH | August 30, 2007 2:59 PM

What's this cable monopoly you all are talking about? Do you mean you actually get cable to watch television?

Joking aside, I do subscribe to cable broadband -- but DSL is enough of a competitor that my rate actually dropped $10/month this year.

Posted by Henry | August 30, 2007 3:05 PM

this comment deleted because it responds to an earlier deleted coment

Posted by HH | August 30, 2007 3:05 PM

HH,

I still don't see what in the heck Big Business has to do with libertarianism. Are you implying that a natural outgrowth of libertarianism will be a country run by Big Business.

If so, than my suggestion would be to see that you could go farther in checking Big Business by being specific in your arguement and attacking Big Business and not Business in general. You could then seek common ground with libertarians in finding ways to keep markets free.

Posted by jbb | August 30, 2007 3:11 PM

Forget high speed internet; how come the government protects Comcast's right to be my sole provider of surly, desultory cable service?

In Virginia, at least, it doesn't. Or at least the state government doesn't. However, plenty of consumer advocates, local governments, and local cable monopolies have complained that statewide cable franchising and competition is merely an invitation to redlining.

Now me personally, I don't understand why there's so much complaining about redlining in a network that hasn't even been fully built yet nor is supposed to even show profits for many years (Verizon shareholders are constantly complaining about the enormous capital cost of FTTH and how much it's hurting the company's bottom line). Complaints about Verizon's legacy phone network that was built thanks to legislative monopoly, or the local monopolies of the cable cos, I understand.

I support the cable companies when they move into phones, and the phone companies when they move into cable.

Posted by John Thacker | August 30, 2007 3:19 PM

Speaking of leapfrogging, that's one reason why certain other countries passed the US. The US's unmetered local phone calls led to incredibly rapid modem adoption, much faster than other countries. It has proven extremely difficult to get people off dial-up even in areas that have extensive broadband available-- one of the network professionals at my office lives in an area where he could get FIOS, and he's still on dial-up.

Posted by John Thacker | August 30, 2007 3:21 PM

this post was previously deleted because it contained a word used instead of yet another word in some movies...:

jbb - this explanation will not suffice for someone like HH? it is BUSINESS that we are talking about... it is inherently bad because the exchange is money!!! even trade of goods is bad... altruism is bad too because even there you can always find a selfish element in place..

why do I get the feeling that HH somehow assumes that this particular blog should be a socialist blog? and even so - how would he run the connectivity project? Should we put CERN and Al Gore in charge of it - both inventors?

Who are you HH.. time to leave the closet?

Posted by Hugo Pottisch | August 30, 2007 3:43 PM

John

The beauty is that now the US can leapfrog as well.. the way that we are developing right now - it does not really matter who or where get there first as we all do it together more or less..

Free local calls (flat ISP rates) due to the existing copper network have in the initial and most important adaptation of the internet helped the US more than the relatively late adoption of wireless telephony!

Now it is time for the next step..

Posted by Hugo Pottisch | August 30, 2007 3:47 PM

HH

You were able to write even more "stuff" in the meantime? Microsoft vs Netscape? Netscape sucked at the time... yes - Microsoft was very dominant in the client software market. the industry, unless you have noticed, has experienced yet another paradigm shift. When the monopoly talks started with Microsoft the window had already closed and Microsoft had won.. Bill Gates explained to the committees that Microsoft is not guaranteed a leader position after the forthcoming paradigm shift but they only saw the devil..

The same holds true for Oracle and SAP and and and... Has anybody seen Google Apps or NetSuite.com - these companies or others could overthrow the business market as well..?

Many people will use their phones now for all kinds of things.. Microsoft is not guaranteed leadership there... in the end they will be seen as a great enabler for a positive revolution!

BTW Firefox (the grandson of Netscape) and Opera are not unpopular, Safari is out for non-Macs..

I hope that you have explained your own position a bit better by now and not merely fired of more adjectives regarding libertarianism...

Posted by Hugo Pottisch | August 30, 2007 4:05 PM

Where are you getting those population density numbers? It's around 80 people per square mile for the US and 870 or so for Japan.

Also, I think the comparison is misleading. The population density of the US is low mainly because of flyover country, which AFAIK doesn't really interfere with the efficient construction of fast broadband networks. Now, it may be that Japan's population centers are packed more densely than ours (and I believe this is true), but probably not ten times more densely. I'd expect ISPs to be able to do in Manhattan whatever they can do in Tokyo.

The real issue, to my mind, is how much the subsidies (briefly) mentioned in the Post article have to do with this. If broadband is cheap and fast in Japan because of subsidies, I don't see that that's something to emulate. If people won't pay for superfast broadband voluntarily, why force them?

Posted by Brandon Berg | August 30, 2007 4:06 PM

For the record, according to the United Nations, the correct numbers for population density for the United States and Japan in 2005: 31 people per square kilometer in the United States and 343 people per square kilometer in Japan. Japan ranks #30 out of 230 nations/territories while the United States ranks #172.

Posted by Internet Ronin | August 30, 2007 4:15 PM

Megan's numbers are for urban population density (just google "12,500 people per square mile").

Regardless, I think density is beside the point. The U.S. has 71 qualifying urban areas (500,000 +). Japan has 16. If density is decisive, why isn't Manhattan super-connected?

Frankly, I'm not sure what superfast broadband really offers to people not doing huge data transfers. If you're not an architect or engineer and you're happy getting your Netflix movies by Fedex, what's the big deal?

Posted by Henry | August 30, 2007 4:36 PM

Superfast broadband should be a very big deal to a Libertarian, because it means that small businesses can potentially compete with bigger businesses as an originator of content. Hosting a high-traffic web business is currently too expensive for most small businesses - largely because of bandwidth cost considerations.

Consider also that we have just passed the peak of world petroleum production, and that network bandwidth with be a decisisive competitive factor in determining which nations can best shield their economies from skyrocketing transportation costs.

Posted by HH | August 30, 2007 5:39 PM

Henry, you are obviously not a gamer. Superfast broadband is very useful if you are playing a multiplayer game over the internet while voice chatting with multiple people. I have broadband cable which is pretty fast and usually doesn't have speed problems, but a faster connection would enable better quality sound and faster connections to game servers. Rather than playing on 3rd party hosted game servers, I could host a server out of my house. Right now, I'm limited in how many players can connect. With faster broadband, more players could connect. I could even host the voice chat server, too.

EI

Posted by Earnest Iconoclast | August 30, 2007 5:48 PM

Wait a minute. HH, are you arguing that we've just passed world peak oil? Could you provide a link please?

Posted by Klug | August 30, 2007 7:07 PM

Free, superfast internet access in the constitution, isn't it? Where did I mislay that NY Times Pocket Constitution?

Posted by Yancey Ward | August 30, 2007 10:06 PM

Read it and weep:

"Forecast world crude oil and lease condensate (C&C) production retains its 2005 peak (Fig 2). The forecast to 2100 shows declining C&C production, using a bottom up forecast to 2012 (Fig 3). The forecast to 2012 shows a 1%/yr decline rate to 2009, followed by a 4%/yr decline rate to 2012."

http://www.theoildrum.com/node/2828

Desperate measures to cut automobile fuel consumption related to workplace commuting will require a massive shift to broadband telecommuting. Broadband policy is thus closely linked to energy policy, as we shall all soon see.

Posted by HH | August 30, 2007 10:15 PM

EI et al.

There is a difference between fast and high throughput. Nearly all "high-speed" internet services promise large amounts of bandwidth, but don't mention anything about round trip time (ping). As a general rule, gaming is much more dependent on ping time than pipe size. I wouldn't mind playing a competitive game on a 56k connection that had a 20ms ping, but a 3m connection with a 1000ms ping would border on unplayable. This is why satellite internet, while having the same or larger bandwidth than cable is unsuitable for gaming, curse the speed of light! =)

Regardless, most gaming companies want to have as large of a market as possible, so they limit the bandwidth consumption to what a modem can support to not exclude a large fraction of their potential customers. However, it's very difficult for them to prevent people with low latency from getting an advantage over those with higher latency, and since dsl and cable, as a general rule, have better pings than modems, they are favored for gaming. However, depending on the implementation of a wireless broadband system, the pings could be significantly worse.

None of that really addresses your point about running servers out of your house. The reasons you can't run a voice chat server out of home connection are two fold. One, you have a very small outgoing pipe. Nearly all home broadband connections are ~128k upstream and ~3m downstream. A modem is ~28k upstream, so you're only getting 4-5x the performance for hosing purposes of someone still on dial-up. Second, the lack of a static IP address coupled with the lack of access to the DNS server, while a solvable problem, creates a pile of complications for hosting services.

Posted by wins32767 | August 31, 2007 8:58 AM

HH - see... you can partake in the discussion...

I do recall the mainframe guys and VAX machines who kept asking me why gopher does not suffice...

Unless we are talking about Multi-Media - there are ways to improve bandwidth without a faster connection...

E.g. the top of the Atlantic's Web site remains more or less the same.. applying so called AJAX technologies can cache/store those parts locally and only update the changes in the text... Google has introduced such a framework recently that can push server apps to a client server (so that they also work offline).. they are late - as these ideas have existed pre-Web 2.0 times but...

when it comes to multi-media - apart from better codex for audio and video - you need to have faster connections... In fact - current DVDand Tivo players who also support MPEG formats are somewhat slowing the whole thing down as they cannot be upgraded easily...

Wimbledon this year tried to offer on-demand video subscriptions (via IBM). Good idea - but I must be able to see the BALL...? Nobody was using the service!

Posted by Hugo Pottisch | August 31, 2007 10:00 AM

For anyone interested in some background to the "Japan rocks" meme, this article is mostly factually correct:

http://www.pbs.org/cringely/pulpit/2007/pulpit_20070803_002641.html

The gist is that Japan has implemented a regulatory scheme whereby NTT, Japan's Ma Bell, was forced to carry competitors at or near cost. This is how the US telecom network was supposed to work (and did, for a short time). However US networks never really got around to laying fiber everywhere, and now that they are, the FCC has kindly given them exemptions so they don't need to offer competitors the sweet deals they can get on the old copper network (and they don't even need to offer those sweet deals on DSL anymore).

My personal take is that separation between network transport (ie getting bits or dialtone or whatever from point a to point b) and service providers (we give you bits or make your dialtone or send your cable signal) was never made in the US, so ATT and the like look at it as if they are forced to open their capital-intensive (to build and maintain) networks to competitors who will eat their lunch. Hardly fair, though a case may be made that those networks are largely paid off from decades of monopoly power, and, as they cross public rights-of-way, are ought be "common good" type services.

Had the separation been clearer and stronger, a situation might have erupted whereby the "transport" companies would have every incentive to roll fiber and higher speed transport connectivity as this would allow them to sell more transport and make more money. Surely it would be expensive (Verizon is reputed to spend >$1000/home to run fiber down the street, not to mention another $500-$1000 to hookup your actual home to the telephone pole). But it would be how these companies make money, so they would do it and we'd have video phones (finally!). But that's not how things shook out (in America at least).

Posted by N M | August 31, 2007 10:25 AM

Just to be clear about "eat their lunch" above, by this I mean the rates of return on "open" networks where ATT provides the underlying transport are still profitable, just not nearly as profitable as providing the transport and the service on top of it. For example, here in my home community, which is an open network for T1 service, a registered Competitive Local Exchange Carrier (CLEC) can buy a T1 point-to-point circuit from ATT, the Incumbent Local Exchange Carrier (ILEC) for ~$50-$60/month. This is still a profitable sale for ATT! The CLEC may turn around and sell the circuit to a customer for $300-$500/mo depending on contract term. ATT will generally offer T1s in the $400-$600 range as well. Now not all of that markup is profit, as there are technicians, installers, equipment at the customer site and the Central Office, marketing, etc. all to pay for, but the point is $50-$60 is all it takes to pay for and provide profit to ATT to have built out the circuit and maintain it.

Posted by N M | August 31, 2007 10:32 AM

(I just can't quit, I know too much about this stuff :)

BTW, for anyone who thinks our salvation lay in wireless, you are dead wrong.

The same problem that prevents the roll out of widespread fiber optic services (the density problem) also prevents the roll out of quality, widespread wireless services.

Unfortunately, the bandwidth of wireless data services is actually not terribly much, and combined with the fact that it is wireless, signal fades in structures requiring re-transmits and forward error correction, etc, its not ideal like a nice conductive copper cable, muchless fiber. The aforementioned cringley article relates that three slingbox users can choke a cellular data site. The solution is to make smaller cell sites so as to minimize the number of customers on each cell, so they each get more bandwidth.

If each cellular site costs hundreds of thousands of dollars of equipment, not to mention on going rooftop or tower rental fees, you can only roll super-fast and quality services in dense areas that serve lots of customers.

WiMax is heralded as "the new Jesus" of broadband (to crib James Fallows). It's signal penetration is good, bandwidth is relatively high (compared to the current situation), etc. But the WiMax providers will only ever provide services in the 3-6 Mbps range, where cable and DSL already are. Meanwhile new cable technologies and fiber rolling out steadily will suddenly start offering 10, 15, 30, 50 and even 100 Mbps services in dense areas that it is cost effective to build out. This is happening now (Verizon FiOS is offering 30, up to 50Mbps in some areas, with potential to go much higher, and Comcast is demoing 100Mbps cable technologies already in use in, e.g., Korea). Even the old copper network is getting in on the action with Fiber-to-the-node making 20Mbps+ DSL possible, and VDSL tech (currently in use in Scandinavia) promising up to >70Mbps depending on distance from the fiber node.

What will WiMax offer in the end? Somewhat better bandwidth to your cell phone in the city, and perhaps a better broadband situation out in the boondocks. But WiMax is already screwed in the Metro. And it won't make the US like Japan/Korea/Scandinavia, for even as we catch up in some dimensions, they just keep pulling ahead.

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