Why Japan Is Eating America’s Lunch on Broadband

 

The modern “conservative” fallacy is that free markets means lack of government regulation. That isn’t even close to what it means…

From The Agonist, August 29, 2007
By Ian Welsh

I often say, to the point where regular readers are probably banging their heads against the keyboard — right now — that the US doesn’t have a lot of complicated problems. We know how to fix most of them and people who keep saying, “well, that’s complicated” are either stupid (unlikely); are benefitting from the status quo or are imagining the migraine of trying to fight entrenched interests.

Broadband access is exactly the same. The US is getting its lunch eaten. As SaveTheInternet points out, they get access that is often 30x faster than the US. As a result they are experiencing innovation — and enjoying applications, that Americans simply don’t get. As this WPost story says:

The speed advantage allows the Japanese to watch broadcast-quality, full-screen television over the Internet, an experience that mocks the grainy, wallet-size images Americans endure.

Ultra-high-speed applications are being rolled out for low-cost, high-definition teleconferencing, for telemedicine — which allows urban doctors to diagnose diseases from a distance — and for advanced telecommuting to help Japan meet its goal of doubling the number of people who work from home by 2010.

Oh, and all that speed — costs less too.

Now, ten years ago Japan had slower internet than the US. So they looked to the US to see how to do it — and they saw that the US had open access laws (where in the old days, comanies could buy access to the lines at wholesale rates — which is why there was an ISP on every corner in the 90’s) and decided they were key.

So they opened up broadband access — mandated that phone and cable lines had to be available to whoever wanted access. As SaveTheInternet points out:

If this quaint idea of “competition” seems familiar, that’s because America invented “open access” policies in the first place. And open access worked for decades to bring lower prices and more choices in long-distance phone service and dial-up Internet access.

The Japanese first adopted open access because they were worried about falling behind us. But under pressure from our own phone and cable monopolists, the Bush administration abandoned open access – and the fundamental protections for Net Neutrality along with it.

Now they’re standing idly by as America drops further and further behind the rest of the world in every measure of broadband progress.

Now here’s the thing. What we’re talking about is the Republican administration reducing competition. In a competitive market this wouldn’t have happened. When you’re dealing with a natural monopoly (and phone and cable lines are natural monopolies because driving more than one each to each home doesn’t make sense) you have to legislate the market in such a way as to make sure competition exists. The free market can’t do its thing if there isn’t a market — and in most of the US there isn’t a market. You have at best two possible suppliers. Often one. And in many areas — if you want “high” speed — none.

The modern “conservative” fallacy is that free markets means lack of government regulation. That isn’t even close to what it means — what it means is a market with many actors, relatively transparent information, and no one actor or group with pricing power, whether through collusion or monopoly.

The laws that made the US resistant to this sort of bullshit have either been taken away (open access) or have been weakend by the courts (for example the recent ruling that prices all being the same wasn’t prima facie evidence of price fixing, which it has been for the last, oh, over 100 years.)

When you don’t have competition, with few exceptions, you don’t get progress or better products. And so the US has worse broadband. It has worse wireless. It has worse (and deliberately crippled) phones. It’s falling behind in the very industry it invented. All because a few gatekeeper corporations don’t want to have to compete and because the Bush administration and conservative justices believe in concentration of wealth rather than progress and competition.

The US will keep falling behind as long as this remains the case. Americans like to think that they are the most technically advanced nation in the world, but except in military affairs, and perhaps biotech, that’s generally not the case. The best and most advanced cars aren’t made in the US. The US’s trains are a joke compared to ultra-fast trains in Japan, China and Europe. The US’s consumer electronics are not as good with very few exceptions. And the US is falling behind on all types of telecommunications that don’t involve spying on someone.

If the US doesn’t make the next technological revolution, foreigners don’t need to hang onto US dollars to be ready to buy up the future. And since the US needs foreigners to subsidize American overconsumption and the overvalued dollar, that’s a bad place to be. If the future isn’t in America, then buying America suddenly doesn’t seem like such a good deal…

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