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It’s Amazing What a Little Competition Will Do

Lost in all the debate over whether Verizon will charge Google to use FiOS or AT&T will charge eBay for selling goods over Project Lightspeed is the fundamental change in the nature of the broadband market over the past year. Competition has broken out. Maybe not perfect competition. But real competition nonetheless. Competition that will benefit the consumer and the country.If we go back just a couple of years, the cable and telephone companies were treating the broadband markets much like their traditional markets. They were mostly focused on signing up new customers at relatively high prices. They weren’t competing with each other so much as they were just trying to occupy the space in an unserved market. Their prices, features and services were not terribly distinguishable. A classic duopoly.But then a couple of things happened to upset the balance — and induce stronger competition. First, the maturity of VoIP technology allowed the cable companies (and other providers like Vonage) to enter the voice market in a strong way. The Bells were faced with losing significant revenues from voice without anything to replace them. Second, the FCC changed the rules to end most unbundling of new facilities deployed by the Bells. That gave them the ability to make large long term investments without worrying that regulatory rules would make it unprofitable.We’re just starting to see the fruits of this competition today. Verizon is rolling out fiber to the home services to millions of homes. AT&T and BellSouth plan to upgrade much of their networks to offer 25 Mbps video and data connections. These are major qualitative improvements in the broadband access market, offering consumers speeds and services not thought of before.This new investment by the telephone companies has spurred major upgrades to the cable networks. Most of the cable operators have increased the speed of their offerings from 3 Mbps to 6 Mbps without increasing the cost of the service. Several cable operators are starting to offer even higher speeds, from 10-15 Mbps. So while the spotlight has moved on to issues like Net Neutrality and the DTV transition, I thought it was worth noting that some good regulatory policy combined with technological innovation is leading to the roll out of the second generation of broadband services in an increasingly competitive market. And that is a very good thing indeed.

Wherefore Art Thou, Broadband?

January 24, 2006 at 12:00 pm PST

With apologies to Billy Shakespeare…what’s going on with the goal of making the US #1 in the world in broadband penetration? It was on June 24, 2004 that President Bush reiterated his national goal of making broadband available to all Americans by 2007 and added an additional goal of making America #1 in broadband penetration in the world, up from its current #10 international ranking (at the time)…we are currently #16. The FCC, under the able leadership of Chairman Kevin Martin (a fellow North Carolinian and it is rumored a possible future candidate for Governor of the state of my birth), has done a lot with respect to the treatment of communications services, but it is unclear to me what is being done to meet the President’s goals. I may be talking out of school here (please, please read the disclaimer on this page) and admittedly tracking broadband in the U.S. is not my #1 (or #30th) job, but in my gut check of gut checks there just doesn’t seem too be much energy around this issue. Broadband has been proven to add to productivity as well as contribute to quality of life (education, healthcare, etc.), so I just thought I’d give a shout out to those more immersed than I and see what people are hearing on the focus of broadband in the U.S. Penetration in the U.S. IS growing by the way, under the current measurements. (See previous blog entry on the definition of broadband…current FCC definition is still 200Kpbs).

U.S. Politics and Policy: Frustrating and Fascinating

January 19, 2006 at 12:00 pm PST

I was at a lunch last week with a leader of one of the major political parties and s/he explained the “no” votes on a particular piece of legislation thusly, (I’m paraphrasing): “The legislation was good legislation, but only marginally impactful. We wanted the members of our party to vote against it, however, because it would mean that the other party would have to get all of their members to vote for it in able for it to pass, especially those in swing-districts or less safe seats. Meaning, of course, that they would be more vulnerable in their general elections.” The focus was not on the “good legislation” but on defeating the other party and having an issue to “get them” come election time. I then read today somewhere the Senate Democratic leader was going to focus on “corruption” of the other party as the way to gain seats for his party, a la 1994 in the post-House banking era. Corruption is a big topic in Washington these days obviously because of Jack Abramoff, but rather than reacting to the news in front of their faces (both sides recently came out with Lobbying Reform Measures), how about focusing on the issues that will actually be impactful to the citizens of this nation? Healthcare anyone? Education? Broadband for every man, woman and child who wants it? No, let’s focus on lobbying reform. Politics is obviously a part of policy. It is the way the U.S. system works. What happened, however, to IDEAS?!! What happened to the OPTIMISM of President Reagan? What happened to doing what is best for the country? What happened to doing what is best for your constituents? There are good ideas out there and the good ones will hopefully rise to the top. The process, however, is a bit frustrating. Perhaps I’ve been out of DC too long and have lost perspective. Perhaps not. In related news, The Gallup Poll came out today and stated that only 27% of voters see the Congress in a favorable light. Perhaps lobbying reform (i.e. my read: not trusting themselves to throw a vote in exchange for a steak) will get them to 28%. I doubt it.

Free Weekly Technology Policy Newsletter from Cisco

January 12, 2006 at 12:00 pm PST

I just got off the phone with a colleague at another high tech company who wanted to know about Cisco’s free, weekly high tech “E-Update”, how it was created, how much time it takes to produce, etc. It made me think that I should ping this audience on its existence and encourage any interested parties to sign up for it.This is the update that we send out (generally) on a weekly basis that tracks the major technology policy stories and trends around the world. We divide it up by geography and offer it for free to whomever wants it. We currently have over 1300 subscribers -- made up primarily of Cisco employees, competitors, media, legislators and regulators (and their staffs). This is just a little service of Cisco’s government affairs group to help (easily) raise awareness of the technology policy issues that are being worked on and written about. If you want to know what Cisco thinks on these subjects you can always visit our website at www.cisco.com/gov. In the meantime, however, if you want to subscribe to our free, technology policy newsletter, please visit our E-Update Subscriber Page to subscribe. Oh, and tell your friends.

“Don’t Want No Smart People”

January 9, 2006 at 12:00 pm PST

With apologies to Randy Newman for the title I thought it was appropriate to touch on a subject that may be discussed more and more in the coming year: immigration. I was at a breakfast* with Senator George Allen (R-VA) this past week and the topic of immigration came up. I have a couple of thoughts on the issue and will attempt to relay them now:1) Are all the people that are against immigration Native Americans? Meaning: everyone’s parents/grandparents/great-grandparents, etc. in this country came from somewhere else (me: Germany, Scotland and Ireland -- with a bit of Cherokee, as well), so why are those who seem to want to build walls around the U.S. so patently against the very way that their ancestors first arrived in the ol’ U.S. of A. Sure, ILLEGAL immigration should be stemmed, but I would venture to say that some of the immigration that occurred to build this nation was not all “legal.” In other words, whatever happened to “give us your poor, your tired, your weak” etc.2) An idea has been floating around Silicon Valley for some time says, if you are foreign born and you receive an advanced degree at an accredited U.S. University your diploma should have a “green-card” or permanent resident status attached to it. Why in the world wouldn’t we want the smartest people in the world to come to the U.S., get educated and STAY and contribute to the economy? (See title above.) Those foreign-born, advanced degree earners who want to go back to their country of origin is fine too. Certainly nothing wrong with having them go home so that they can tell their fellow citizens that Americans are fine, (for the most part) hard-working people.3) Much of this issue, of course, goes to the underlying education system in the U.S. Sure, we have smart people, but if you look at the trends and our emerging global competitors, other countries are focusing on the so-called STEM majors (the innovation majors) (Science, Technology, Engineering and Math) while the number of U.S. citizens majoring in these subjects continues to decline. How do we supplement this shortfall before we can get a rebirth in the interest of students going into these disciplines so that we can maintain our global innovation edge? (See #2 above).In sum, we want smart people to come get educated in the U.S. and work, live and play ™ in the U.S. and we have to recognize that this is the right policy to pursue. We also must pursue a parallel policy that focuses on the reasons that our own U.S. citizens aren’t going into the STEM disciplines and rectify it before it’s too late.*At breakfast, eggs, hash browns and bacon were served. I put Tabasco on my eggs, but much prefer Cholula sauce when available -- it is, by far, the tastiest of the hot sauces on the market. You can find it your supermarket’s hot sauce section or in your local Mexican grocery. I share this bit of wisdom because I care. : )