DSL Prime: Closing the Internet to the Poor

While lack of competition partly explains why broadband is available in some places and not in others, poverty and corrupt government could explain the rest in places such as the U.S. and Japan.

by Dave Burstein of DSL Prime and Future of TV and the Web Video Summit [June 28, 2007]

"It's not too shabby"
—Jonny Ive, on the first public iPhone call.

Not quite "Mr. Watson come here I want to see you," but the iPhone will soon live up to the hype.

Randall Stephenson is now the most powerful person on the internet, running the world's largest backbone and the largest phone company in the West. Ed Whitacre built the empire on power and money. The almost unknown, has another weapon: the most remarkable small computer ever created, the iPhone. It will live up to the hype, probably even in version 0.8 releasing Friday. I'll have much more coverage of both Randall and the iPhone—but not this issue.

Xavier Niel of Iliad/Free is almost as enthusiastic about his technical breakthrough, dramatically reduced errors using Broadcom's new "Phy-R" software. "Look at the data in the annex," he writes. Xavier runs Europe's largest TV over DSL system and has taken over two million customers from France Telecom, so his opinion carries weight.

Say hello to the round fellow with a beard at WVS as I dash madly. But do come—some of the most interesting people in our world will be there.

*** Jupitermedia note: Web Video Summit. San Jose Marriott June 27-28. Some of the most knowledgeable people in the world accepted my invitation to speak, and it's going to be a darn strong show. Lively, too, with video playing throughout and lots of time to get your opinions in. The free "exhibits" pass also gets you in for some great sessions Wednesday afternoon. At least come for that. If you should be at the full conference and the money is a problem, e-mail me and I'll try to find a way. db
http://www.webvideosummit.com/conference/sessionsbyday.php

New Explanation For U.S. Broadband Gap: Excessive Poverty
Kevin Martin provided the clue
Of course the U.S. is behind, although as Ed Richards of OFCOM points out standings in the league tables are not the primary goal of policy. Mike Gallagher figures only 3 to 7 percent of the U.S. will be unserved the end of this year, and we are close to that now. There are not enough unservable rural homes to be the major explanation.

Martin's focus on low rural penetration pointed me to another characteristic of U.S. rural areas: poverty. Plenty of data to confirm that well off people almost all have broadband, the middle class is getting to a good take rate, and most of the homes that aren't connected are folks who can't afford it. A country with more poor people would have more homes without broadband than a more egalitarian nations of similar 'average" income. So I went to the CIA World Factbook for the Gini coefficients, which rise when income is less equal.

Among the most equal, Denmark, Sweden, and Finland have among the highest broadband rates, despite only moderate competition. At the bottom, the U.S. problem is well known, and the Japanese take rate is little higher than the U.S. despite lower prices.

This quick chart proves little, of course, especially by Richards' standard of "evidence-based policy." I'll follow this up by looking at the market structure, which I think is an even more powerful explanation. (More than four competitors drive down prices, and low prices in turn are the single biggest factor.) But I'd love to see a comprehensive analysis of broadband data against income inequality. Maybe someone at a Bell can demonstrate the U.S. problem is not of their doing, and if the U.S. wants broadband for all we should renew the war on poverty. Jim Cicconi, Tom Tauke, do you hear me now?

Copyright 2007 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

"The power of the printing press belongs solely to those who own the presses"
—A.J. Leibling

The Internet is the cheapest printing press ever invented.