[12789] in Commercialization & Privatization of the Internet
Re: Information subsidies
daemon@ATHENA.MIT.EDU (Miles R Fidelman)
Sun May 29 00:53:51 1994
Date: Sat, 28 May 1994 10:13:51 -0400 (EDT)
From: Miles R Fidelman <fidelman@civicnet.org>
To: com-priv@psi.com
In-Reply-To: <199405270644.BAA26258@illuminati.io.com>
On Fri, 27 May 1994, Draper Kauffman wrote:
> When I pay for my phone line, one of the things I'm paying for is the
> ability to reach almost anyone in the country (and a lot of the rest of the
> world). So, in principle, I'm willing to pay a small portion of my bill
> toward achieving that universality because it has value to me. This isn't
> to say that the current transfer system is still necessary or that it is
> the most effective way to achieve this goal. It is just a reminder that
> universal connectivity is a "good" that benefits _all_ users, not just the
> recipients of the subsidy.
>
Thanks for about the best statement of this that I've seen from anyone.
> Having said that, however, I'm puzzled as to why the EFF feels any
> subsidies are necessary. IP access is already as cheap as phone service in
> most US cities. In fact, considering that there is no surcharge for
> "long-distance" on the Internet, it is vastly cheaper than phone service.
Aside from EFF's position, and the issues of taxes, there are three key
points to note:
i. much of the country's population doesn't live in major metropolitan
areas -- just as with the telephone, there's considerable justification
for government policies/actions/funding to extend universal IP service to
less populated areas -- with telephones, this took the form of
urban-rural cross-subsidies built into the regulated pricing structure,
it also took (takes) the form of loan funds available to rural telephone
cooperatives (from the Federal Rural Electrification Agency) [note: in a
lot of rural areas its hard to find an analog line capable of supporting
v.32 modems, and good luck in finding a rural cable system with a fiber
backbone capable of supporting ethernet-over-cable technology]
ii. there's a major disparity between what small users and large users
can buy in the way of IP access -- a medium to large site can buy
flat-rate, leased line access at a pretty low cost-per-user (around here,
a large site can buy a 10mbps microwave feed for $50,000/year -- with
1000 users, that's $50/desktop/year not counting internal network costs)
-- a residential user can buy SLIP/PPP service at $29/month and can use
flat-rate residential phone service to dial in -- BUT: a small business
user, a non-profit, etc. has to pay a per-minute local-call charge of
$.015 (which is low compared to, say, rural Vermont), and in a lot of
places (for example, Cape Cod) there is no local dial-in point so access
is a long-distance call away ----- in short, local loop costs are a
killer for a key sector of the economy ----- since local loop costs are
currently regulated by public utility commissions it seems reasonable for
us to pressure regulators to set local loop pricing in a way that
encourages small business use of the Internet ----- I find it quite
discouraging that small Internent providers are not more active in
lobbying PUCs (this one is not an issue of should Government regulate or
not, in this case the issue is whether or not the Internet community
should be promoting its own interests in an already regulated arena)
iii. the thrust of current Federal legislative efforts is to deregulate
currently regulated telephone and cable carriers on the theory that they
will then proceed to build new and improved local loop facilities -- this
is all well and good if we end up with local loop service with data
services equivalent to a good campus area network -- if the result is
lots of asymetric systems, with the outbound channel good only for
ordering pay-per-view movies, then we're all in big trouble -- so it
makes a good amount of sense for Federal involvement in setting standards
for local loop services and possibly for set-top devices -- this would
be reasonable quid-pro-quo for massive deregulation
Miles Fidelman
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Miles R. Fidelman mfidelman@civicnet.org
Executive Director 91 Baldwin St. Charlestown MA 02129
The Center for Civic Networking 617-241-9205 fax: 617-241-5064
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