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.

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.

The gaming world got some giddy news to mull over at last week’s Game Developers Conference. OnLive unveiled a new gaming console and platform dedicated to streaming games over the internet. There will be no discs – just a constant internet connection bringing a variety of games to computers and televisions. Most interestingly, all the processing of the games happen on some server, allowing basic PCs to play the most graphically intense games.  Displays at GDC showed basic laptops playing Crysis, a game that taxes even the most top-of-the line PCs.

Very little is known about how the system works, especially details like pricing. But in continuing the hype machine, OnLive is an exciting endeavor and even more thrilling experiment into the future of video games and digital distribution. There are many technical hurdles, specifically how fast connections will be. Streaming high-definition games at the demanded 30 frames per second requires a rapid and steady connection. It’s possible OnLive is a few years too early with broadband speeds no up to their challenge.

The experiment itself is in launching a new business opportunity for video games, and even a model for the entertainment industry.  OnLive is offering a microconole for gamers who want to play on their televisions, but they are also offering a browser plug-in so people can play right on their computers.  No hardware requirement means an instant customer base open to the product.  Hardware’s a tough business as movie-streaming services like Blockbuster and Netflix are learning.  Screenshots show options to rent or buy games, showing flexible pricing, though I’d prefer a subscription option similar to GameTap.  There are no details about downloading content onto hard drives to play offline, but that also would be appreciated.

OnLive boasts impressive support from leading game developers and now the debate begins of will it succeed or lose. Too many details are up in the air (how open is the system, how much value does the service offer the user, how comfortable is the controller). Certainly a slick interface and high-profile (if not out-dated) library makes me think OnLive is on the right path.  The case study alone will be worth the price of admission.

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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.

Like a 14.4k modem, broadband is crawling into the nation debate as an actual issue. Barack Obama reminded voters of his plan to use tax money to expand broadband lines to rural areas (where the government is almost discouraging expansion), though John McCain disagrees. Also, the Senate passed a bill on Friday to improve broadband competition. The bill just scratches the surface, adding a question on internet access to the Census and charging the FCC to gather data on telecommunication services annually. A similar bill passed the House last year.

Obviously this bill does very little and I’d love if Obama would push this broadband agenda which, along with green energy, are growing markets that would create jobs, capital, and innovation. Plus it’s an issue McCain doesn’t even know exists. Except when he invented that Blackberry Obama loves so much.

Several fiber optic companies in Amsterdam are testing 1 gigabit connections, internet speeds fast enough for four simultaneous HD movies at once.

The U.S. has been crawling behind Europe, Asia, and even Canada in broadband speeds and penetration.  Instead of rolling out fiber optic connections like Japan and Amsterdam, U.S. cable providers are imposing bandwidth caps.  Only Verizon offers high speed fiber optics in the U.S., which only gives speeds of 50 Mb/s, can cost almost $150, and is only available in a few major cities.

The U.S. suffers from a technological disconnect, only one part of our suffering infrastructure.  As more and more business and information moves online, countries with strong broadband infrastructures will have a competitive edge.  The Baller Herbst Law Group wrote a report on how the U.S. needs universal gigabits speeds by 2015 to stay economically competitive. But the U.S. lacks a broadband strategy like the successful seven year rollout in Japan.

In 2001, when the United States ranked 4th in the world, Japan had only a small handful of broadband lines. Spurred by the “broadband miracle” under way in nearby South Korea, Japan’s top government and private-sector leaders decided to make Japan the world’s leading broadband nation. They then developed and executed an all-hands-on-deck action plan to achieve that goal, including aggressive federal subsidies, low-interest and no-interest loans, loan guarantees, tax breaks, grants-in-aid to municipalities, targeted government purchases of services, a concerted national public education campaign, and a wide range of private-sector initiatives driven by a sense of national purpose and long-term thinking.

Today, Japan has the fastest and cheapest broadband in the world. Consumers in Japan can get broadband that is 10 times faster than the speeds available to average Americans, for prices that are less than a quarter of the prices that Americans must pay. Broadband providers currently compete at 1 Gbps, and this is expected to increase to 10 Gbps by 2010. Broadband is now available almost ubiquitously throughout Japan, and the “almost” will be removed by 2010. Today, 85 percent of households have access to fiber connectivity, and more than 35 percent of households have adopted it. Availability of fiber connective it will increase to 90 percent by 2010.

The U.S. ranks 15th in median broadband speeds at 2.35 megabits per second, behind Japan’s 63 mb/s.

To say the U.S. does nothing isn’t true.  Much of U.S. policy has hurt broadband penetration and competition.  The FCC uses provenly false methods of tracking cable competition and still pushes a 30 percent limit on cable company subscriber base.

While penalizing cable companies, the FCC lets telecommunication companies consolidate while doing away with common carrier requirements that have been vital to Japan’s success and would help increase competition.

The U.S. needs a broadband strategy that includes federal subsides and low-interest loans to encourage development.  These incentives ensure broadband will reach even the poorest areas and keep the United States competitive with the rest of the world. It will be expensive to full deploy fiber connections country wide.  Estimates in the U.K. are between $9 and $50 billion. As Japan (and Australia) have shown, results can be seen within a few years to the benefit of companies and citizens.

This is an issue unfortunately being ignored this election year.  When the next generation of Microsofts, Googles, and Apples originate in South Korea and Denmark, then the U.S. may get a clue.  But by then we might be too far behind to play catch up.

Comcast announced 250 gigabyte caps per month on all its customers.  While the cap is much higher than Time Warner’s 5 gig cap and more than 99 percent of its subscribers use, the precedent is scary for all interest users.

Much of internet innovation has unlimited usage to thank.  Web video, VOIP, online video games, and more have enjoyed years of breathing room to enter people’s homes.  With bandwidth caps, however high, every YouTube video comes with a price tag.

Comcast technically has a right to limit its network. The problem is a lack real competition.  I could only get Comcast in my last apartment. In my new apartment, I can choose between content filtering and slower AT&T DSL or Comcast. No other company is allowed in my building. So Comcast gets away with bandwidth caps. Time Warner gets away with it.  And the tiny few remaining cable providers get away with it too.  It’s a competition to taking away value from customers, not adding value.

Further, should Comcast and Time Warner want customers using more bandwidth? That would make us more reliant on their services. Already I’d pay a premium for speed (if I could find a place that offered FIOS) and as more people find use in online video and services, more people will want faster speeds with more bandwidth. Instead, Comcast wants to offer you less, charge you the same, and ignore the future. Never a good business strategy, unless you have no competition.

Republican presidential candidate John McCain has been open about his lack of computer knowledge, saying “I am an illiterate that has to rely on my wife for all of the assistance that I can get.” He adds he’s “learning to get online” and “will have that down fairly soon.” He doesn’t read email and won’t blog. McCain’s aide Mark Soohoo added “you don’t have to use a computer to understand how it shapes the country.”

Is that true? With so many technology issues going unaddressed or made worse with bad legislation, can we support a politician who isn’t fully informed.

Politicians, especially presidential candidates, should have a familiarity with the major technology trends, issues, and debates much like they would any other field from energy to foreign policy. I don’t expect candidates to design their own web pages or develop PHP applications, but using email and and search engines should be second nature.

The United States has no broadband policy, an out-of-date legal system unable to cope with online issues, and a steam of misinformation about security and privacy risks all likely do to a legislative body uneducated on the driving force of the world economy.  Politicians should know more than the average person because they have to make decisions that affect everyone else. Advisors are there to help filter the information, but some knowledge needs to come from the politicians, otherwise how can we trust they’ll make good decisions.

And admitting you don’t know something 73 percent of Americans use regular isn’t a good decision.

John Grapper of the Financial Times points out (registration required) U.S.’s lagging infrastructure from worn out roads to spotty cell coverage and poor broadband penetration.

If anyone doubts the problems of US infrastructure, I suggest he or she take a flight to John F. Kennedy airport (braving the landing delay), ride a taxi on the pot-holed and congested Brooklyn-Queens Expressway and try to make a mobile phone call en route.

That should settle it, particularly for those who have experienced smooth flights, train rides and road travel, and speedy communications networks in, say, Beijing, Paris or Abu Dhabi recently. The gulf in public and private infrastructure is, to put it mildly, alarming for US competitiveness.

Throw this on the pile with healthcare and green technology and it’s scary to think how the richest country in the world can keep calling itself that.  Creative Class Exchange and Economist’s View echo Grapper’s concerns. Thomas Friedman wrote in The World is Flat how he traveled up and down Japan on the bullet train, easily sending emails all along the way.  I compare London’s amazing subways with a new train every 2-3 minutes to Boston’s horrendous 10-20 minute waits, even during peak hours (and don’t get me started on the $20 billion Big Dig).

This faulting infrastructure costs U.S. money and productivity.  We can’t get municipal wireless into major cities and the FCC would rather limit cable companies than let them spread broadband around the country.

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