Friday, November 02, 2012
BROOKE GLADSTONE: A lie can go halfway around the world before the truth gets its pants on but actually, doesn’t that depend on the speed of your Internet connection? The Commerce Department reports that over 100 million Americans do not have high speed Internet at home, largely because of high costs and the lack of available infrastructure.
The United States once led the world in Internet speed and infrastructure. Now, according to one estimate, it ranks at about 29. And David Cay Johnston, journalist and author of The Fine Print: How Big Companies Use Plain English to Rob you Blind, says that the government sits passively back as the cost of cable soars and telephone companies rake in hundreds of billions of dollars because they promise to upgrade their systems from low-speed copper wire to high-speed fiber optic. But the companies haven’t been under any pressure to deliver it.
DAVID CAY JOHNSTON: And instead, the companies diverted that money and built us the cell telephone network. Each of these companies has looked at how to maximize its profits, and if they think they can make more money by cross-marketing between Verizon and Comcast, instead of laying down fiber optic, they’re going to do that.
BROOKE GLADSTONE: What you're saying is that Verizon can provide its service on Comcast infrastructure. It doesn't cost them nearly as much as building their own, but they can still raise prices.
DAVID CAY JOHNSTON: Cartels inherently have an upward pressure on prices. That's the reason that we have anti-trust laws, which we’re ignoring in these cases. The real competition that’s going on in the country is coming from municipal systems, places like Chattanooga, Tennessee, Lafayette, Louisiana that have built their own municipal high quality Internet systems. And so, what has the response been of the telecommunications companies? Let’s get laws passed at the state level that either prohibit municipal systems or severely restrict them, so we can continue to jack up prices, provide low-quality services and create a cartel, the emerging AT&T-Verizon-Comcast-Cox-Time Warner cartel.
BROOKE GLADSTONE: There have been publicly-funded systems that compete with private Internet, but not without a great deal of difficulty. You cite the case of Glasgow, Kentucky as an example of how things can work, but the kinds of extraordinary challenges they face getting off the ground.
DAVID CAY JOHNSTON: The Progress and Freedom Foundation, which was actually a front group for the telecommunications industry, created by Newt Gingrich when he was Speaker of the House, worked together with the local monopoly provider, then called Telescripts [?], to try and defeat construction of the system in Glasgow. They tried to run up legal bills, published articles saying this is inherently an inefficient and bad idea; government can't do this well. They did everything they could to block this system.
Well, once the system got in place, lo and behold, it paid for itself and made money for the city. It was dramatically better, faster than the existing system at much lower cost.
BROOKE GLADSTONE: So how hard would it be to replicate the experience of Glasgow, Kentucky?
DAVID CAY JOHNSTON: A number of other communities have done what Glasgow has done. Those communities that have built their own systems generally charge much lower prices, provide much, much better and more reliable service and, in many cases, they generate a profit that helps hold down property taxes in those communities.
BROOKE GLADSTONE: David, are you saying that the public option is always the better option? I mean, governments have been known to misuse public funds.
DAVID CAY JOHNSTON: Sure, and so have corporations. You don’t hear about it when corporations do it because they don't have to make the disclosures that your local city government does. But no, I’m not arguing that we shouldn't necessarily have corporate systems. What I'm saying is we need to have a set of rules that say what we need is universal high-speed access. We need to have the best Internet in the world, if we’re going to compete in the 21st century economy, so that we don't end up, as we are now, with an Internet not up to the standards of places like Ukraine, Moldavia*, Lithuania?
BROOKE GLADSTONE: So what if we don’t have as good an Internet system as Moldavia*?
DAVID CAY JOHNSTON: You know, about a third of our economy comes from advances in physics in the early 20th century - Einstein back in those days?
BROOKE GLADSTONE: Mm-hmm.
DAVID CAY JOHNSTON: That's why we have today things like geo-positioning satellites and cell phones and the algorithms that allow this broadcast to go all over the country. If we don’t have a first rate Internet, there are services that will never be invented here. You have to have the underlying structures if you're going to have economic growth.
BROOKE GLADSTONE: You're saying that we should regard the Internet as a public utility, as a public service shepherded, to some degree, by the government. But isn't that anathema to roughly half the country?
DAVID CAY JOHNSTON: You know, Brooke, I teach the history of business regulation from Hammurabi to today in the Law School and the Graduate Business School at Syracuse. And what a lot of Americans believe about business has no historical reference. It is not consistent with the practices of the founders at the time this country was started. It is, instead, an ideology promoted by economists that on paper looks beautiful but in the real world is not how things work out.
We need to have public policies that recognize that the Internet is the key to economic growth in the 21st century and that the purpose of our government is not to funnel public resources to promote that of a handful of companies, notably Verizon and AT&T but to promote, as our Constitution says in its Preamble, the general welfare, to make the country better off.
BROOKE GLADSTONE: So to paraphrase an old expression about business, what's good for General Motors isn't necessarily good for America?
DAVID CAY JOHNSTON: Exactly.
BROOKE GLADSTONE: David, thank you very much.
DAVID CAY JOHNSTON: Thank you, Brooke.
BROOKE GLADSTONE: David Cay Johnston is the author of The Fine Print: How Big Companies Use Plain English to Rob you Blind.
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