Settles: When facts distort broadband reality, bad things happen

Craig SettlesTwo weeks ago, the media was all atwitter (literally online) over the FCC's decision to reclassify Internet service providers from "information services" companies to telecom companies. Even before the announcement, this battle was heated.

Wireless industry lobby groups and public interest groups have had intense exchanges on reclassification and net neutrality. Some of these skirmishes highlight a serious threat to the ability to improve the state of broadband in the U.S. Facts. No, the facts aren't dangerous. It's how they're used and abused that's a clear and present danger.

One skirmish line is that wireless broadband competition in the U.S.--and wireless in general--is doing well. Despite naysayers, "We're No. 1 in broadband in the world!" An industry cheerleader launched a series of points to support his "all is well" argument, leading off with the Thomas Jefferson quote "facts are stubborn things." Really? I think the poet Andrew Lang in the late 1800's better sums up things: "He uses statistics as a drunken man uses lampposts ... for support rather than illumination."

There are facts, and then there's reality

The challenge for everyone fighting for better broadband is that the constant repetition of facts from supposed "credible third parties" can sell people on positions counter to their best interests if we're not vigilant and diligent. Our task is not separating fact from fiction, but separating reality from stated fact and the context of that fact's use.

One industry response to the argument that there isn't competitive broadband in much of the U.S. is, "We have the lowest concentration and Herfindahl-Hirschman Index (HHI) among the 26 Organization for Economic Co-Operation and Development (OECD) countries monitored by Bank of America Merrill Lynch, including the lowest concentration among the top two providers." 

Having just co-authored a report on the state of broadband competition in the U.S., I can tell you with certainty there are several ways to factually support a positive or a negative view of competition. However, you can't escape the reality of market share, particularly when you take data directly from millions of customers to determine who uses which providers, as we did. In many states, statewide market share reveals near or actual duopolies, most often with one wireless and one cable provider as the un-dynamic duo. When you look at data at the county and city level, the reality for many re-defines bleak.

Top execs at the big wireless companies like to throw out the fact that the U.S. has more 3G users than several countries in Europe combined. If 30 million subscribers represent 55 percent of a total population, and 10 million subscribers represent 95 percent of another country's population (all hypothetical numbers), Country A has numerical superiority but in reality their broadband adoption rate sucks wind compared to Country B.

An industry tactic to counter the charge that Americans pay too much for too little broadband (which is the reality many of us live with) is to argue that wireless calling plan prices are at rock bottom. Well, I guess if you can't dazzle with a brilliant defense of high-priced, frequently poor performing data services, you may as well try to baffle us with facts about calling plan prices. 

There are many more examples. This flood of incumbent's facts that stubbornly defy (or deny) the broadband world as it really exists makes it difficult for smaller providers and others to act on solutions that resolve this competition dilemma.

Ontario County's cure for denial

One of the clubs that incumbents use to try to beat everyone into line with their agenda is the threat "we won't invest in broadband if you [fill in the blank]." While it may be a fact they won't invest if the FCC reclassifies them or passes net neutrality rules (a claim that's both pathetic and ridiculous), in reality there are many options for getting broadband into communities without incumbents' investments. Ontario County, N.Y., offers a great real world example of communities getting the broadband they want.

The county is building 180 miles of fiber backbone through all of its municipalities. This network has a startup cost of $7.5 million. Local government is facilitating the financing without exposing taxpayer dollars to risk. Here's how:

The state created the Ontario County Office of Economic Development/Industrial Development Agency, a quasi-government agency that spearheads economic activities. Local businesses, the direct beneficiaries of projects that boost the economy, pay the agency for various services. Some of that money underwrites Axcess Ontario, the county nonprofit created to deploy the network.

Since there are no stockholders, the county establishes a 25-year ROI model. This long-term payback arrangement enables Axcess Ontario to charge providers inexpensive rates for using the fiber to deliver last-mile services. Local service providers can jump into what is now a financially viable arrangement, communities get affordable broadband and businesses have a tool to become stronger economic engines.

Here is yet another example of a cool public-private partnership to resolve the broadband investment challenge. Edward Hemminger, CIO of Ontario County, stated in Government Technology, "we can go into much more rural areas than typical carriers can. The barrier for a typical telephone company is the return to shareholders. They can't create a 25-year ROI. It doesn't make any sense for them."

When communities become the driving force in the broadband equation, assisted by private sector resources, they can tackle the real market failures incumbents try to hide in a blizzard of inconsequential facts. This is why North Carolinians are fighting tooth and nail to beat back another Time Warner attempt to remove communities from the equation through an anti-muni network bill in the state legislature.

You regional and local providers who are being pushed off the broadband stage in your markets can roll over and accept this fate. Or you can build creative partnerships with communities that re-shape the realities of your competitive landscape.

Craig Settles, President of Successful.com and Co-director of Communities United for Broadband, is an industry expert who helps organizations pursue stimulus grants. Follow Craig at twitter.com/cjsettles.

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