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| Mignon Clyburn's Courage |
| Wednesday, 10 March 2010 22:51 |
 Mignon Clyburn gave the keynote at the FCC/Newseum praising the plan's National Digital Literacy Corps. Well and good, she said the next day, but nothing affects the poor more than the price. In a D.C. bombshell, Clyburn tore into the carriers for sabotaging U.S. broadband with higher prices. Comcast, AT&T, and Verizon have just announced $500M in broadband price increases. The cost of providing broadband continues to fall. Wall Street pegs margins at 80%. But the cablecos and telcos are mostly competing on how quickly they can raise prices, and wireless will never be more than a partial substitute. “I learned that another major broadband provider is raising its rates for its lowest tiers of broadband service." Clyburn writes. "This news came on the heels of plans unveiled by other major providers throughout the country to increase prices as well." Clyburn is outraged. “If our push to increase broadband adoption - including through Lifeline subsidies - merely results in higher prices for the lowest-income consumers, programs like the National Digital Literacy Corps will be for naught.”
The solution isn't easy, because the cost advantages of scale probably will prevent any strong competitor emerging. Economists don't have answers for what to do when competition is weak other than some exercise of government power, but traditional regulation is no panacea. Hard decisions are needed, however, unless the U.S. is comfortable with an overpriced and occasionally inferior Internet. Until Ms. Clyburn wrote this: STATEMENT OF COMMISSIONER MIGNON CLYBURN REGARDING BROADBAND AFFORDABILITY AND COMPETITION "Yesterday I had the honor of presenting one of the recommendations in the upcoming National Broadband Plan aimed at encouraging some of the 93 million Americans who do not currently have broadband at home to get on-line. In particular, I previewed the Plan's recommendation that we create a National Digital Literacy Corps in order to help individuals who are unfamiliar with or intimidated by the on-line world develop the skills they need to be comfortable on-line and to take full advantage of all it has to offer. "The same day we announced these important recommendations designed to usher more Americans into the digital age, however, I learned that another major broadband provider is raising its rates for its lowest tiers of broadband service. This news came on the heels of plans unveiled by other major providers throughout the country to increase prices as well. So, just as we are in the process of proposing steps to ensure that more people are comfortable signing up for broadband service, providers of that very service are raising prices.
"If we are serious as a nation - both public and private sectors - about connecting America; about leading the world technologically and economically; about ensuring that all Americans have meaningful access to on-line education, healthcare, and information essential to citizenry, then we should be very concerned about these ominous signs. For if our push to increase broadband adoption - including through Lifeline subsidies - merely results in higher prices for the lowest-income consumers, programs like the National Digital Literacy Corps will be for naught. "This is an issue we must examine closely going forward. Thirty-six percent of non-adopters cite a cost-related reason as their main barrier to adoption, with 15 percent pointing to the monthly cost of service, and 9 percent saying they do not want a long-term service contract or find the installation fee too high. Across-the-board price increases, especially on those who can least afford it, should raise a red flag for the Commission. When prices rise across the industry, and where there are only a limited number of players in the game, we have to ask ourselves whether there is any meaningful competition in the marketplace. Moreover, when executives from major broadband providers indicate that they will only roll out faster speeds in the few markets where they have competition, our fears about whether meaningful competition exists should grow. If we fail to think deeply about these issues, consumers will suffer, and low-income Americans in particular will be left long behind." -------------------- Until Julius delivers on his primary goal of affordable broadband, I consider him an emperor without clothes. Outside of D.C., everyone's reporting the plan is not delivering what's promised. From inside D.C. I'm getting a remarkable response to my article concluding "The U.S. broadband plan accomplishes very little for affordability, quality, speed, or availability of broadband in the U.S." http://bit.ly/dCKcCs In public, however, D.C. had nothing but praise for the plan.
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