While many countries continue to roll out faster and cheaper broadband, the U.S. remains locked in simply how to define broadband. For all our claims of technological superiority, our country is falling behind.  So how did Monticello, Minn, a town of less than 12,000, get some of the fastest and cheapest internet service in the country?

They tried to build it themselves.

In 2007, Monticello tried to build its own fiber-optic network recognizing that no business was going to using city bonds to fund the project. The local teleco, TDS Telecommunications, sued. And it sued over and over again up to the Minnesota Supreme Court claiming the town could only use bond money for specific reasons, like building utilities. The courts ruled the internet is a utility and the town could build its own.

Now TDS has launched 50Mbps fiber service to every home costing a fair $49.95.

TDS originally claimed it did not believe there was demand for faster speeds until after the town passed its referendum, but that does not explain why the company sued to the city rather than compete with its lead in the market.  But as we’re seeing around the country, lack of competition among internet service providers is costing Americans money for poor service.

Lafeyette, Louisiana launched its own fiber optic network and states they have saved their citizens $3 million because local cable provider Cox has not raised its prices even while raising them everywhere else.

Hopefully these examples will be a call to arms for local governments to recognize that their local cable and telecommunications provider is unlikely to improve their service (they’ve had more than a decade) even though prices keep rising.  These companies have had monopolies on their areas, and the lack of competition is costing us money while the rest of the world speeds past us.

The U.S. ranks 20th in the world for broadband penetration and pays higher prices for slower speeds.

All the manufacturing jobs leave the U.S. for China, India, South America, and eventually Africa, the U.S. will face more economic competition for both products and minds. To remain and be a knowledge leader throughout the next century, the U.S. has one massive industry that cannot be easily copied – universities.

Higher education in the U.S. is unmatched by any country. U.S. universities dominate international rankings. Shanghai Jiao Tong University awards the U.S. with 54 spots on the top 100 with the U.K. trailing with 11, Germany at 6, and downward. Many of our universities are famous and respected because of centuries of history and the prestige and connections that provides, something not easily replicated by young yet also top schools in India, China, and other emerging powers.

First, I bringing this up as, amid the global recession, universities are at risk. California is slashing university funding and endowments at Harvard and other universities have seen 27 percent losses. Also most threatening is the drop in foreign applications to U.S. universities, the first drop in five years (when the last drop had more to do with 9/11 than economics). Prices for U.S. universities have skyrockets, more than three times more than inflation, while the government makes attaining visas even harder.

But we should want foreign students coming to study in the U.S. This encourages the next generation of business leaders, scientists, and artists to spend four or more years in the U.S., spending money, learning our culture (and selfishly, learning English), and then hopefully staying to work here or, at least, doing business with us.

This is why limiting H-1B visas is so dangerous for the U.S. economy. One out of four tech companies are founded by immigrants who then create far more jobs than they take away. Even without starting companies, our current tech companies cannot fill all the high-tech jobs they need, but are limited to only a few foreign hirers. Instead, these highly trained and would-be highly paid immigrants return to their native countries to start companies there.

Monday, I will discuss how universities structure, from price to format, is undergoing a radical shift that requires forward-thinking and evolution.

Hank Williams, author of the blog Why Does Everything Suck, has a cynical view of the recent economic crash claiming that it has more to do with technology making people and their jobs obsolete. But the numbers, and some history, show this to be completely untrue.

Williams writes:

The problem is that we are in this awful in-between phase of our planets productivity curve. Technology has vastly reduced the number of workers and resources that are required to make what the planet needs. This means that a small number of people, the people in control of the creation of goods, get the benefit of the increased productivity. When we get to the end of this curve and everyone can, in essence, be their own manufacturer, things will be good again. But until we can ride this curve to its natural stopping point, there will be much suffering, as the jobs that technology kills are not replaced.

The fact is technology, throughout history, has increased the number of jobs, not diminished them. Further, the new jobs created are often higher paying jobs.  ATMs, for instance, do away with bank tellers, but then we need people to make and maintain the ATMs.

I wrote about this trade off several months ago. I linked to a Slate article listing the dozens of industries put out of business by new technology over the last century. Yet instead of declining jobs and growth, the  last century has been one of prosperity.

Technology helps make us a more efficient society, allowing fewer people to do one task and devote time to another. The U.S. used to employ the vast majority of its citizens in food production, but now less than one percent of our GDP comes from agriculture yet we produce more food than before. All those people once focused on growing and harvesting food went on to build new industries like movies, air transportation, computers, and the internet.

Speaking of the internet, how did that Dot Com Boom go? A massive increase in job creation in an all new industry not seen before. Yes there was a crash, millions of jobs lost. And you know what? We recovered and built sustainable jobs in that same all new industry.

Of course, it would help if Williams looked at where the jobs are actually being lost.  The financial industry hasn’t lost more than 300,000 jobs because of better technology, but rather unregulated greed, corruption, and bad investments. The mortgage and construction industries have lots hundreds and thousands of jobs because of more than a decade of over investment and now a large drop in people not wanted to buy new houses.

The jobs lost are not just low-skilled or low-income jobs. This economic crash is the result of many, many issues including many industries not adapting to new technology rather than simply being made obsolete (see the auto and newspaper industries). After the end of this recession, the U.S. and most other countries will have reprioritized their resources, both in terms of dollars and labor. Maybe more people will be available to research and build a massive green technology industry. How about turning stem-cells into a viable business? What haven’t I thought of? Who would have thought 10 years ago that writing 140 characters would be a billion dollar business? By removing some jobs, we free up resources, both people and dollars, to do more in other places.

I still find it surprising that often the people who create problems are asked to then fix them. And I’m not talking about the financial crisis. Broadband internet in the U.S. significantly lags behind many countries with slower and more expensive internet connections.  The Organization for Economic Co-operation and Development found the U.S. ranks 19th in the world with advertised rates of 9.6 megabytes per second, far behind Japan’s 92.8 mbps, Korea’s 80.8 mbps, and France’s 51 mbps.

If the U.S. had real competition for internet access, we would likely have faster speeds and more ubiquitous access (a shared infrastructure like we have for telephones and power lines would be an excellent start), but instead of promoting competition, the government continues to listen to and reward the incumbent with free money and laws that only keep our internet slow and expensive.

First, the FCC is listening to ISPs urging the government to define broadband at significantly lower speeds than the lower speeds we already have. Both Verizon and Comcast suggested speeds of than a single mbps. These numbers matter, since the $7.2 billion from the stimulus package is meant for broadband speeds.

Of course, expanding broadband is also important than just increasing speeds, but we lack any real map of what parts of the country have and don’t have broadband access.  The FCC for years used knowingly faulty data to claim there was competition between ISPs. Of course, the ISPs keep these maps secrets, making it more crazy that the government would look to the telecommunication industry’s own organization, Connected Nation, to map the nation broadband infrastructure.  Lots of questions are facing Florida for why it granted its mapping to the new and unproven group, when its bid was more than double that of the highly experienced (in the Florida market even) second highest bidder.

ISPs claim customers don’t want or need these faster speeds, but at the same time, ISPs are arguing that they need to traffic shape or even charge more because users are using so much bandwidth. The truth is 18 other countries are still paying less for much faster service; service that is available in more households and more areas of the country.  These countries will be more competitive at attracting technology companies who want to offer more bandwidth intensive products, like high-def videos and gaming, to other products we can’t yet imagine. How could YouTube have existed before broadband?  Let’s start planning for the future. The U.S. needs to stay technological competitive, and listening to the companies that made us fall behind are not the ones to trust when thinking about how to fix it.

First, Australia announces $31 billion to build a massive fiber optic network across the country, aiming to give 90 percent of its citizens 100 megabits of speed by 2018.  The UK is much more conservative spending $366 million for universal broadband of 2 megabits by 2012. Even Estonia is devoting $374 million for 100 megabit broadband by 2015.

In the midst of an economic crisis, these countries are throwing around heaps of money, to spread the internet to all corners.  Maybe they recognize the value having a connected populous can be, like telephone and power lines were almost a century ago.

Unfortunately, the U.S. still treats broadband like an afterthought rather than a priority. President Obama has stated national broadband is important, but the longer we wait, the farther ahead other countries get building up their infrastructure, taking away the technological advantages the U.S. has in the increasingly competitive world.

What’s worse, is easy fixes are ignored in place of bad policy and even worse corporate irresponsibility.  Time Warner Cable pulled back on plans to implement metered price plans for broadband, and now is pulling back on plans to increase capability – something that would improve value and thus increase their subscriptions.

Further, Time Warner Cable, again, is lobbying Wilson, North Carolina to block municipal broadband.  Time Warner Cable is trying to pass a bill banning municipal broadband, similar to the bills its and other ISPs have passed in more than a dozen states.  Why municipal broadband has to be banned isn’t clear since in a free market economy, competition is considered healthy.  The town just wants to offer its citizens what Time Warner refuses to provide.

Last week I wrote about using bailout money to fund start-ups rather than supporting already failing companies. Leave it to Techdirt’s Michael Masnick to show how short my post fell.

Obama’s bailout plan, as he says, is focused strictly on creating jobs as quickly as possible.  But truly successful start-ups create jobs slowly. And if they’re truly revolutionary, they even destroy the need for other jobs.  Masnick explains this:

So, think about it from a government bureaucrat’s perspective right now. Go back a few decades, and assume someone came to you with a plan to create the internet — and even accurately described how it would allow a great free exchange of information. The reaction, if you were trying to deal with an economic crisis, would be to focus on all of the jobs it upset. People can share music online? Think of all the job losses in the music industry! People can read news for free? Think of all those newspapers shutting down! But they wouldn’t consider all of the economic activity created by the internet — the billions of dollars and millions of new jobs created thanks to it.

The internet makes so many things easier, it makes those jobs obsolete, but doing so, it opens up millions of new jobs over the long-term.  It takes more jobs to make cars than it did to make and sell a horse and buggy.  Bailing out incumbent companies prevents the risk-taking and innovation that will create the next industry. It’s short-term thinking that is, part, of the same problem Wall Street got into. When all you think about it the quarterly job report, sustainable economic growth is always another quarter behind.

Thomas Friedman this weekend wrote a column asking for more stimulus money to go to start-ups rather than bailout failing car companies and banks (again).  Originally I was just go to praise and agree with Friedman until some bloggers came out criticizing his position.  So now I actually have to be persuasive.

Friedman’s argument is we need to stop giving public money to companies that screwed themselves up.  GM and Ford and begging for another $20 billion.  Friedman says let them fail and rightfully so. GM and Ford spent billions lobbying Congress to avoid fuel regulation and letting Toyoda out-innovate them.  After laying of 50,000 employees, these companies want more public money (on top of the $15 billion they already got) for no other reason that avoid economic catastrophe in Michigan.  But why are we rewarding companies that were run so badly?

Silicon Alley Insider says most start-ups are bad and investing them will lead to misallocation of resources.  My question – how much worse than GM and Ford can than these start-ups be?  These massive firms are laying off tens of thousands with little plan on how to fix themselves.  Start-ups, even likely to fail, provide widespread job creation, at least short term,  and creativity and experimentation leading to long term benefits in technology, innovation, and new business models.  Friedman points out, Intel and Google both grew out of recessions – harder economic times make start-ups more grateful for the opportunity and aggressive to succeed.  There’s less a flood of new companies, allowing the cream to truly rise to the top.

Stimulus money shouldn’t hand out money to just anybody.  It should function just like a venture capital firm (with the ability to offer tax credits on top of grants and subsidies).  Money rewards smart business plans that serve the public good – by creating jobs and long term benefits, and even failures can be learned from.  And just like any venture firm, we’re banking on one or two companies actually taking off and paying back the taxpayers with equity.  When do we expect GM, Ford, and all the banks to pay us back?

Risk alone should never be a reason not to do something.  Even failure has benefits; failure is also why we diversify so no loss alone is catastrophic. This means still helping larger companies that provide a tangible plan for how to succeed.  Fixing 10-20 years of bad management can be just as hard as starting a business from scratch – just think about how many start-ups could be built with $20 billion.  This is what risk-benefit analysis is all about.  We are not comparing our risk to benefit.  Rewarding smart and innovative businesses sounds like a good risk to make.

I’m excited to write such a scary headline. The irony is the person spying on you is – You.  A new bill making its way through Congress will require any operator of a wireless network to maintain records of IP addresses for up to two years.  This means every cafe, park, and homemaker would suddenly have massive data requirements.

Of course, this is all done, really, to protect the child.  Senator John Cornyn summarized the importance of the bill:

While the Internet has generated many positive changes in the way we communicate and do business, its limitless nature offers anonymity that has opened the door to criminals looking to harm innocent children. Keeping our children safe requires cooperation on the local, state, federal, and family level.

The bill is even titled the Internet Stopping Adults Facilitating the Exploitation of Today’s Youth Act or Internet Safety Act. Creative. A similar bill was introduced three years ago.

Of course, this bill will do nothing to protect children. Instead, it will put an undue burden on businesses and individuals to maintain huge records of unneeded data.  Jonathan Zittrain wrote about the inefficiency of data retention laws back in 2002.  Forcing so much data retention makes it harder to find the information you need.  Michael Masnick puts it, we need better data, not more data.

Senator Diane Feinstein added an odd amendment to the stimulus package aimed at forcing ISPs to regulate copyright infringement (and child pornography) on their networks.  The content filtering amendment has been pushed off the stimulus bill, but more for procedural issues than merits making it likely we’ll see it again.

Feinstein’s amendment is a dream for copyright holders with little regard for consumers and service providers (ironic Feinstein’s from California, right?). Her amendment calls “for reasonable network management practices such as deterring unlawful activity, including child pornography and copyright infringement.” These being the most heinous things one can do online.  Congress almost regularly puts up these “stop child pornography” bills that chill free speech and are struck down by the courts, but no members of Congress are likely to vote against protecting our children.

Content filtering, for all the grandstanding done by copyright holders (and attorney generals against child pornography), are wholly ineffective.  No technology has been shown to know what’s copyrighted material or even pornography, legal or otherwise.  So this reasonable network management is pie in the sky meant to put the responsibility of policing everyone on ISPs who are protected under various safe harbor provisions.  The only way they could even attempt this is with deep packet inspections which lead to serious privacy concerns.  Public Knowledge brought great attention to the issue, which is quiet for now, but likely to return again.

As the stimulus package meandering its way through Congress, the good parts seem to get lost on the way.  $2 billion for rural broadband development has been removed showing its not as much of a priority as more tax cuts. This may not be a bad thing.

I have issue with broadband being mashed up in the stimulus (I have problems with the stimulus itself, but that’s another post). President Obama claims the money is meant to create jobs more than expand broadband, but why one and not the other?  Especially when the jobs research he’s basing this on is out-of-date?  The stimulus version of broadband looks more like a payoff to the current telecommunications players who’ve been unmotivated to spread broadband themselves (some even actively preventing it).

The United States is ranked 15th in broadband adoption with significantly slower speeds for more money. We need a real, long term broadband strategy, like Japan, where money is offered to companies who produce results.  I’d say this should apply to all government money (it doesn’t), but one step at a time. The government should offer low-interest loans and grants for broadband rollout proposals. Companies need to compete for this money and know they only get paid with results. We can even use the contractor rules - a third to start, a third in the middle, and a third at the end. This way the money isn’t just given to incumbent players with a history of not doing anything (hence why we’re 15th in broadband).

With government money tied to actual results, companies have to produce results - and those results are likely more jobs and a better standard of living for those with new broadband connections. And because of the government assistance, the price of the broadband will (should) be cheaper. Further, by not relying on tax breaks, like Obama’s proposal, grants and low-interest loans provide capital to encourage new players in the industry.  The lack of competition leads to more problems than obsolete technology.

Promising huge payouts to companies isn’t stimulus and it isn’t strategy. Let’s do broadband strategy better than we’re fixing our banks.