Everyone that's wondering why this doesn't happen, the answer is simple: private enterprise.
The ideal network is publicly owned and privately operated/maintained, but that will never happen because the state would be impinging on the liberty of corporations to profit. In a reasonable state, the gov't would connect every home and operators would compete on service. Instead, we take the tacit monopoly granted to early operators and extend that into the abysmal dystopia we live in today, one where carriers control all.
You could have ubiquitous 10Gb links to every home, if only some one would let you, and then folks start to say "well why don't we do this for every industry. Why if everyone paid their fair share we could all have cheap healthcare!". And therein lies the problem.
Profit and public interest are diametrically opposed in the case of utilities. Nevermind that most carriers operate over publicly licensed spectrum, or send cables along publicly owned land; a monopoly is the epitome of capitalism and Telecom is printing money.
In short, ubiquitous fast internet access has never been a technical problem or a distribution problem, it is a social problem; just like healthcare and, to a lesser extent, power and water.
::EDIT:: I am not saying that profit or capitalism is wrong, only that in the case of utilities, on which we all rely, it is a bit strange.
There are countries where this is being done. Uruguay is tiny and highly urbanized, but it's got a goal of achieving this very thing. Every phone line in the country, there are only about 900,000, comes with free no cost broadband. You get 1GB of traffic free, an extra GB of traffic if you visit educational sites associated with One Laptop Per Child. Speaking of which, every child in the country gets a laptop, so they can get online.
So they've achieved two goals of universal access already. They gave everybody a computer and everybody a slow but free internet connection.
Now that they achieved that, they are rolling out fiber to the country. So far it's just in some neighborhoods of the capital, but if you can get it's a pretty good deal 120M fiber connection for $83 USD per month. Beyond fixed line internet, there's 3G/4G coverage over every city/town/village with good bandwidth (i got 5m up / down last time i tried it).
How did they do this? The government treats getting good internet access as a human right. There's ANTEL, a state telco monopoly which sees it's mission as getting everybody online. There's a viable threat that if ANTEL didn't do it's job, the market could be opened to competition. Bridging the digital divide is a national priority and so Uruguay has chosen to invest heavily in making sure everybody's included and online. As a result, Uruguay has the highest internet penetration rates in Latin America.
Other parts of the state, like the energy company is well on it's way to eliminating the need of fossil fuels for electricity production, primarily through hydro and wind power.
Utilities are precisely places where the state can, has, and should continue to provide a common level of service everybody can expect. Getting universal internet access, cheap and fast, is something any country can achieve if they decide it's important. If a tiny country in south american you've never heard of with $15k gdp per capita and 3.8 cows per person can do it, the wealthiest country in the world should be able to pull it off.
Take a hard look at fish populations in the ocean and I think you may reconsider your stance on private vs. public property for "public goods". The problem isn't the inherent nature of private enterprise, the problem is the marriage of private enterprise and government which has created an anti-competitive ecosystem in the telecom industry. The monopolies you speak of are created with the help of government favoritism.
Water is both a matter of public trust and run by the town, at least here in Research Triangle (Raleigh, Durham, Chapel Hill), North Carolina USA. It never gets shut down (unless you don't pay for 2 whole months, and even then only if you're under 65 years old), they send out water tests every quarter, and about 5 years ago they switched over to smart water metrics using Aquasense modules.
We as taxpayers subsidized fiber in this country, we should (as they have in England with BT) force incumbents to share those subsidized lines to competition. Let the competition worry about the last 200 feet leading to my house. Because Buddha knows the incumbents aren't too worried about running it.
For better or worse, we actually are trying to do something about universal care. It's just that there is a particular generation of voters and lawmakers that are truly afraid of losing their level of care to cover who they view as younger and less deserving generations/cultures/people.
> a monopoly is the epitome of capitalism and Telecom is printing money.
But you said earlier:
> Instead, we take the tacit monopoly granted to early operators and extend that into the abysmal dystopia we live in today, one where carriers control all.
So you agree that what we have in the telecom industry isn't capitalism (since it is the government that grants these telecoms their monopolies), yet you also think that capitalism inevitably leads to monopolies, even though this is demonstrably not the case?
I think trust was intended, from the context. It's not a monopoly, it's an oligopoly.
But it's also a bit wrong to argue that capitalism is at fault here. It appears it's rather the rampant and ubiquitous corruption, greed, and incompetence of government at every level, coupled with the fact that $$ == speech in the USA.
This isn't going to change into a publicly-run publicly-funded enterprise anytime soon, so our best bet is a company that has yet to be wholly consumed by evil (Google, in this case, though they're on the fast track to it by trading our privacy for money from advertisers). I'd be OK with a country-wide investment to help Google deploy Fiber as quickly as possible, but I'd want some kind of guarantee that at some point the entire infrastructure would revert to public control, just to prevent Comcast 2.0 from forming. It would be rather funny to see a kickstarter hit $11B, too.
> but I'd want some kind of guarantee that at some point the entire infrastructure would revert to public control, just to prevent Comcast 2.0 from forming.
You want to stop a monopoly from forming... by creating a government-run monopoly. And you trust the government to be in complete control of the internet. Yet you agree that the government is corrupt, greedy, and incompetent. I don't understand in the least.
I'm not proposing a government-run monopoly. I'm proposing Google be publicly funded up front to take advantage of the current legal system to create a monopoly by sustaining funding that gives it a supreme advantage over everyone else (we give them money) but at the cost that the infrastructure built has to become publicly owned (by the people, not by a government) after some period of time.
No government is involved here. We'd be handing Google the funds to demolish any and all competition with an agreement that they do NOT create a monopoly.
Both local and federal government have colluded to create the trust of service providers that exists today. Public funds paid to build much of the existing infrastructure, then exclusive control over that infrastructure has been granted by local governments. That's fine within a state, but Comcast for example, is operating nationally, so the federal government (in particular the FCC) has permitted them to acquire some absurd 70%+ of all small service providers and obtain these local monopolies all over the country. We can't trust the government to do the right thing in this space, since even though every wireless provider is colluding to keep prices fixed, and every consumer-facing ISP is colluding to keep prices fixed, there has yet to be any investigation into trusts. It's extremely obvious that the $50/mo being required by every single competing company when the same service is $8/mo anywhere else in the world is a fixed price. All of them should be fined some $50B each and/or dismantled.
But we have an opportunity here: Google could completely destroy their business. All of them. Entirely. We (and Google) understand that their services are overpriced in excess of 500%+ of the actual cost and that they don't actually invest more than ~5-10% of their profits in improving the infrastructure. This leaves a LOT of room for a company with nearly unlimited funding to step in and completely dominate. None of these companies will offer you 1gbps, not even for $500/mo. So if Google, cooperating with the citizens of the US at large, were to agree to build this infrastructure, demolish the entire ISP space, and then turn over everything at some point, I'd be willing to pay 100% of my disposable income, and I'm sure I'm not alone. The $11B it would cost (probably closer to $100B, realistically) would be entirely worth killing the likes of Comcast, AT&T, Verizon, Time Warner, Rogers, Sprint, etc.
We can't really win against lobbyists and every congressperson being guaranteed a job paying in excess of $800k/yr when they retire for doing what big interests want. We can win, however, by abusing the very system they put in place, by massively funding a single corporation. The problem with their logic is that they assume they will continue to have the most money to throw around. No company in existence, in the world, can compete with even 3% of our GDP. None. So if we really want to destroy the massive corruption that exists, we just have to commit the resources necessary. No government required, as the corruption has already provided the framework.
The monopolies quip is Peter Thiel's philiosophy taken from his class that what's his name from Amicus transcribed and put online. In short, the peak of capitalism is a monopoly; all companies that aren't monopolies pretend to be, all companies that are monopolies pretend not to be.
$11 billion per year for 20 million homes or roughly $550/home/year or $45/home/month
And, for perspective:
From 1936 to 1938, the Rural Electrification Administration spent $210 million ($3.37 billion in 2012 dollars) to connect 100,000 rural farms to the electrical grid at a cost $950 each (over $15,000 in 2012 dollars).
Edit: Per the title update from "annually" to "over 5 years" the above, non-historical numbers are off by a factor of 5. The costs would be $110/home/year or $9/home/month over 5 years!
Oops! Thanks for the correction. I guess I missed that detail.
$9/home/month or $110/home/year for 5 years is even more manageable, though!
Edit: I see now where militiaman21 requested that the title be updated to "over 5 years" per new information. When I posted my numbers, the title said annually. I thought maybe I had missed something in the text.
UPDATE 3:45pm CT: Kirjner wrote us to say that he had "picked up a typo in our write-up. The $11 billion is not annual but total. I corrected it in our files. Please do so too if you can." In other words, rather than Google spending $11 billion annually, the analysts estimate this is what Google would spend over five years
Only $11 billion? That's nothing (we probably spend more in month or two on Iraq). Why can't the government roll out high speed Internet to everyone and lease the lines to ISPs? Somehow we have gone backwards, there was more choice and competition in the dial-up networking era than now.
Another comparison: Yahoo Finance says Time Warner Cable's income in 2011 is ~$20B. I'm not sure I understand why $2B/year for five years is a big obstacle. Reaching 15% of the US cable market (60M households in Q42011 per Nielsen) is 9M subscribers, which at $120/month (current Google Fiber cable replacement rate) is $12B/year.
Anyone else understand why this is poor ROI? Obviously network construction is only part of the operational cost of a big network. But if it's a tiny part, then it seems even stranger that it's being presented as an obstacle. Internet-only rates would be ~$6B/yr, but that has substantially less overhead cost of content associated.
Current cable+tv price: ~$100/mo
Cost to build out goog fiber competitor: $166,666,667/mo
Potential price point of fiber+tv to stay competitive with goog fiber: $120/mo
Why would a cable company spend $166m/month in order to get little additional revenue? No, they'd rather add Cable Box Remote Control Rental Fees - it doesn't cost them extra, and it increases their revenue.
Only if they're at risk of losing current subscribers through losing their monopoly status will this behavior change.
It's honestly not a ton of money for Google either. On top of that I don't know why it would need to be all rolled out at once when you could do a slow roll out over many years.
And yet there are so many idiots that will "denounce" the waste in tax payer's money in funding NASA or projects like this (I know, I'm preaching to the quire) and yet say nothing about the waste in wars. Stupid is as stupid does I guess.
I've had a couple of experiences in my career where the enormity of something just sort of changed my world view. The first time was when I was working as an intern at IBM during the summer and came across the complete list of IBM's property holdings. Back in the 70's they would have made the largest REITs look puny. The second time was about a month into my tenure at Google when I discovered a tool called 'network weather' (which, appropriately, gave an overview of what was going on across the global network). Without being specific, I can say that Google fully appreciated the importance of network bandwidth on their ability to operate.
their analysis of why Google is doing this in the first place:
"we believe Google Fiber has two related objectives: first, Google is seeking to figure out whether or not, or under what conditions, it can make money as a facilities-based provider of broadband and pay TV services; second, it is an opportunity for Google to test new applications, new ad formats and delivery models (e.g., targeted TV ads) and to get further insight into consumer behavior."
This completely misses what I believe to be the primary reason, which is raising the bar for internet access, regardless of who's providing it. Chrome started out similarly, though my impression is that Google does care about dominance for that now.
But the point is: if google fiber in 3 cities means comcast gets better in 1000, that's a win for google.
A collective action startup could help solve the problem for neighborhoods wanting FTTH. In a Groupon/Kickstarter model, each house commits ~$3,000 toward a goal. When 250 households in a neighborhood commit and collectively commit ~$750,000 (i.e. $3,000 x ~250 homes) then sub contractors lay the fiber in the neighborhood.
As an aside, the Australian government spent ~$4,000 per household to connect each house to FTTH.
"Probably will never happen" is a phrase that has been applied to human flight, walking on the moon, the internet, just about everything we take for granted now. I tend to dismiss someone's opinion when they utter such words.
How about this math 11,000 million dollars per year divided by 115 million households, divided by $70/ month, divided by 12 months per year. That's 11% percent of households to break even?
65% of adults already have broadband at home in the US. So will about 1 in 6 switch to 100x better for marginally more money?
"we estimate the annual [capital expenditure] investment required to be in the order of $11 billion to pass the homes, before acquiring or connecting a single customer."
The statement is a bit ambiguous, perhaps the problem is that it costs $11B just to reach 20M homes, regardless of whether or not they choose to purchase the service, in which case they would be losing a lot of money.
Ironically their analysis actually convinces me of the opposite proposition. Frankly, the most neglected part of their analysis is the a can Google actually make money from customers who only pay the initial fee and never pay again for 7 years. Could they conceivably make money on a per customer bases on a customer who paid nothing? I believe they can. Does Google Fiber have the reputation of being the best ISP in the United States. I believe it does. Does that branding offer a regulatory advantage? Will municipalities forgo revenue for high quality utilities? That's probably the question that keeps ISP execs up at nights.
What's missing is the return on investment data.If it's good , the $11B number would be an advantage: a good investment at a huge scale, something many companies are looking for.
There is also a great by-product to going national... Google will now not only know everything that passes through their search engine, they will also know every customers web habbits and, unlike traditional ISPs, can capitalize on them. This in itself has to worth a couple Billion.
Also, what if, by chance, google allowed you to reduce your monthly bill by say $10 a month by making your default browser google.com?
$11b to destroy a media and internet distribution monopoly?
Owning the distribution can allow them to enter markets that don't seem so crazy when you consider that google could do offer a YouTube user an upgrade to publish their channel to their local market for a fee.
There are probably a dozen things I can't think of that Google can do with a media monopoly so I'm not ready to say that $11b is too much.
A month ago this would have seemed perfectly sensible, but if this is just a platform for experimentation and data-gathering, why do another city? Austin is apparently similar in demographics to Kansas City, so I'm not sure you'd get considerably different results, and I can't imagine KC is too small to provide a reasonable sample... seems like there has to be more going on here than that.
If done by private enterprise, the spectre of blackspots in non-revenue generating areas that would entrench rich/poor district disadvantages is what I'm concerned about.
$11B annually is a "low" number? That's an utterly incredible amount of money.
Google doesn't have to bring fiber to everyone; they just have to exert enough pressure on the incumbents to get them to step up their game out of fear that Google might move into <market> next and knock them off their pedestal. Google isn't doing this for good will - they're doing it to advance the state of broadband in the US.
It has been corrected to be $11B over a five year period, not annually as it was originally stated.
Considering that Google almost hit $11B in profit in 2012 alone, spending $11B over 5 years on a revolutionary infrastructure project that might even start making a direct profit directly from the monthly fees after a while for itself, but most importantly could totally revolutionize what type of services and experiences Google could deliver to ~15% of American households - doesn't seem like such a bad investment after all.
AFAIK, when Google (or any other FTTH provider) comes into a city the incumbent ISPs improve service/lower prices only in that city. I don't know how to scare them into lowering prices without actually competing.
I suspect part of that may be due to lower market penetration. At some point, the FTTH market will reach a point of critical mass where it has to be competed with nationally, not just regionally.
That said, the cost estimates are just infrastructure expenditure to reach 20 million homes. If 1/3rd of those subscribed to Fiber @ $70/mo, 1/3rd at $120/mo, and 1/3rd did not subscribe, or subscribed at $0/mo, that's $15.2 billion in revenue annually, ignoring the $300/install offset from $0/mo customers. Those are totally BS, made-up numbers with wild assumptions, but it's a huge market and there's a lot of money to be made in it.
The ideal network is publicly owned and privately operated/maintained, but that will never happen because the state would be impinging on the liberty of corporations to profit. In a reasonable state, the gov't would connect every home and operators would compete on service. Instead, we take the tacit monopoly granted to early operators and extend that into the abysmal dystopia we live in today, one where carriers control all.
You could have ubiquitous 10Gb links to every home, if only some one would let you, and then folks start to say "well why don't we do this for every industry. Why if everyone paid their fair share we could all have cheap healthcare!". And therein lies the problem.
Profit and public interest are diametrically opposed in the case of utilities. Nevermind that most carriers operate over publicly licensed spectrum, or send cables along publicly owned land; a monopoly is the epitome of capitalism and Telecom is printing money.
In short, ubiquitous fast internet access has never been a technical problem or a distribution problem, it is a social problem; just like healthcare and, to a lesser extent, power and water.
::EDIT:: I am not saying that profit or capitalism is wrong, only that in the case of utilities, on which we all rely, it is a bit strange.