Government boosting the economy and saving people money... in Australia

The Australian government is boosting its economy and giving residents cheap access to high-speed Internet that should further boost its economy:

The Australian government said on Tuesday that it would create a publicly owned company to build a national high-speed broadband network worth 43 billion Australian dollars, or $31 billion, in one of the largest state-sponsored Internet infrastructure upgrades in the world.

Prime Minister Kevin Rudd said the eight-year project would create up to 37,000 jobs at the peak of construction, giving a lift to the economy…

Mr. Rudd [chose] a superior but more expensive network that would deliver broadband speeds of up to 100 megabits a second — fast enough to download multiple movies simultaneously — to 90 percent of Australian buildings through fiber optic cables connected directly to the buildings. The remaining 10 percent will receive upgraded wireless access.

By contrast, Americans are stuck paying very high prices for very slow Internet access:

The fastest consumer broadband in the world is the 160-megabit-per-second service offered by J:Com, the largest cable company in Japan. Here’s how much the company had to invest to upgrade its network to provide that speed: $20 per home passed.

The cable modem needed for that speed costs about $60…

The experience in Japan suggests that the major cable systems in the United States might be able to increase the speed of their broadband service by five to 10 times right away. They might not need to charge much more for it than they do now and they’d still make as much money.

The cable industry here uses the same technology as J:Com. …[T]he monthly cost of bandwidth to connect a home to the Internet is minimal, executives say.

So what’s wrong with this picture in the United States? The cable companies, like Comcast and Cablevision, that are moving quickly to install the fast broadband technology, called Docsis 3, are charging as much as $140 a month for 50 Mbps service. Meanwhile other companies, like Time Warner Cable, are moving much more slowly to upgrade.

Competition, or the lack of it, goes a long way to explaining why the fees are higher in the United States. There is less competition in the United States than in many other countries. Broadband already has the highest profit margins of any product cable companies offer.

Why do American legislators allow telecom companies to price-gouge Americans? $$$$$$$$$, of course! Telecom companies “earn” massive profits because consumers have so few options. And consumers have so few options because telecom companies have bribed lobbied local, state and federal legislators with huge financial contributions.

When cities have attempted to provide citizens with Internet access, telecoms have fought back. Lawrence Lessig explained in March 2005:

Communism was defeated in Pennsylvania last year. Governor Ed Rendell signed into law a bill prohibiting the Reds in local government from offering free Wi-Fi throughout their municipalities. The action came after Philadelphia, where more than 50 percent of neighborhoods don’t have access to broadband, embarked on a $10 million wireless Internet project. City leaders had stepped in where the free market had failed. Of course, it’s a slippery slope from free Internet access to Karl Marx. So Rendell, the telecom industry’s latest toady, even while exempting the City of Brotherly Love, acted to spare Pennsylvania from this grave threat to its economic freedom…

[T]he communist menace has infiltrated governments everywhere. Ever notice those free photons as you walk the city at night? Ever think about the poor streetlamp companies, run out of business because municipalities deigned to do completely what private industry would do only incompletely? Or think about the scandal of public roads: How many tollbooth workers have lost their jobs because we no longer (since about the 18th century) fund all roads through private enterprise? Municipal buses compete with private taxis. City police departments hamper the growth at Pinkerton’s (now Securitas). It’s a national scandal. So let the principle that guided Rendell guide governments everywhere: If private industry can provide a service, however poorly or incompletely, then ban the government from competing. What’s true for Wi-Fi should be true for water.

No, I haven’t lost my mind. But this sort of insanity is raging across the US today. Pushed by lobbyists, at least 14 states have passed legislation similar to Pennsylvania’s. I’ve always wondered what almost $1 billion spent on lobbying state lawmakers gets you. Now I’m beginning to see.

Posted by James on Tuesday, April 07, 2009