The Reason for the Internet Connectivity Problem

We all should be riding on waves of light, but false monopolies propped up by Government regulation of communications has stifled innovation and business plans alike.

I was just listening to TWiT and they were having this discussion about the internet connectivity problem, the fact that we have a duopoly of telco and cable controlling it and now threatening bandwidth caps that could effect the coming consumption of video streaming that is coming online with Netflix, iTunes, Amazon, and the advent of live streaming from Ustream, Justin.tv, et. al. This is in fact the new paradigm, “Real-Time” as its known in the industry, and the falsely earned duopoly is threatening to turn off the spicket as it were just as video, a major leap forward for the net, wants to take center stage.

Leo Laporte suggested why doesn’t the government just force the cable companies to sell their access to other companies, just like they do with telco, in order to solve the problem.

Sounds reasonable, right?

No, no, no! A thousand times no! This is the very action embodied in the Telco Act of 1996 that caused the problem in the first place. It was the false propping up of competition that killed real competition.

Remember all those small telco companies that cropped up out of nowhere in the 90’s who promised you the moon and then quickly went broke?

Their entire business plan was not competitive, not investing their own capital, but merely using government regulation that allowed them to piggy back on existing infrastructure with no capital invested.

Then the whole thing came crashing down. It sucked the life out of broadband, and since all of the business plans of Web 1.0 were based on ubiquitous broadband, we had the great internet crash of 2000.

Think about it. If you had the billions of dollars it would take to make a go of it in the connectivity market, would you invest in laying fiber to people’s homes, when the government can come in at any time and force you to resell that access at no profit to an upstart “connectivity” company, a phantom company? NO. And that, my friends, lays the problem.

We all should have a fiber connection to our home for a reasonable price. The technology is there, the market is there, but the only thing that is standing in the way is Government regulation in the first place.

People like Leo still believe that the government is on the people’s side in this issue. But it isn’t. The government is on the Oligarch’s side. It’s like the old bit of “Good cop, bad cop.” The government in the major industries plays “Good Cop,” but behind the scenes it is the industry leaders who are writing the very legislation that the Government blesses, and thus stops investment in productivity, and ends up lowering the standard of living for all.

The only solution is for the government to get out of the way. On the one hand you have to let the Telcos and the Cables do what they want and have their data caps if they want. On the other hand they have to make it very clear that they won’t interfere with any real capital that is anxious to enter the market, making it clear that they can fairly compete.

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