September 30, 2005

Quote of the Day: Jeff Flake, Arizona Congressman

Filed under: Economy,Quotes, Etc. of the Day,Taxes & Government — Tom @ 3:00 pm

I’m sure there will be howls of protest and accusations that Mr. Flake is a meanie lacking compassion, but here it is (link requires subscription; HT Club for Growth):

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US Broadband Use May or May Not Be Peaking, But It Lags Other Developed Countries

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 10:51 am

This looks like a bigger paradox (Forbes.com article probably requires subscription) than I can explain, and I’m surprised it hasn’t been discussed more:

Broadband Growth Narrows In U.S.

NEW YORK – After years of double-digit growth, the rate at which Americans are switching to high-speed broadband Internet connections is slowing considerably and could slow further. That the U.S. is a laggard in broadband penetration–the country ranks 12th globally–could have implications for America’s social and economic standing in the world.

Lack of growth may also hamper efforts by content owners (music, movies, television and videogames) to digitally distribute their product.

….. In May 2005, 53% of home Internet users had high-speed connections, up from 50% in December 2004. It’s an increase that Pew deems “small” and “statistically insignificant” and one that “compares unfavorably” with the double-digit growth rates of previous years.

Worse, there is less pent-up demand for broadband among dial-up users, and the potential pool of high-speed subscribers is either holding steady or declining. Indeed, this scenario is evidenced by new-subscriber growth statistics among some companies. Comcast, the largest cable operator in the U.S., reported 297,000 new broadband subscribers for the quarter ended June 30, down from 327,000 new subscribers a year earlier.

In its second quarter ended in June, Verizon Communications added 278,000 high-speed digital subscriber line (DSL) subscribers, down from 280,000 new adds last year.

According to Pew, 32% of American adults don’t use the Internet, a figure that has held steady in the first half of 2005. Just 23% of new Internet users who have come online in the last year have done so via broadband.

Price may be just one of many factors. The average monthly cost of a high-speed connection, according to Pew, is $39, compared with $38 three years ago. In an attempt to lure the millions of high-speed holdouts, Verizon and SBC Communications last month announced $14.95 monthly DSL plans.

Their services technically qualify as broadband under U.S. Federal Communications Commission standards, but the speed, 768 kilobits per second, is much slower than standard DSL or cable service.

Horrigan says a bigger hurdle to overcome is user apathy and a lack of involvement with the Internet. “A big issue is that dial-up users today are less-ardent Web users than they were three years ago,” says Horrigan. He says dial-up users are experimenting less, doing less online and spending less time online than they did three years ago, so they don’t see the benefit of higher-speed connections.

“The profile of experienced Internet users is different because they’re not as fervent in their Internet use, [which] explains why further growth in the broadband population is likely to slow down,” Horrigan says.

Today’s dial-up users are also less educated, older and have lower incomes than dial-up users surveyed several years ago.

….. in contrast with some countries, in the U.S. broadband access is not subsidized by federal, state or local governments. This will likely become a more controversial point as activists and politicians assess the economic and social costs of being disconnected.

For politicians, championing subsidized high-speed access (whether wireless or wired) may be a way to court constituents and turn Internet access into a sort of public utility. But they will likely butt heads with free-market proponents who dislike using taxpayer funds for such things, while noting an inequity: The private sector lacks access to cheap capital like municipal bonds.

All this is not to say that broadband hasn’t enjoyed a steep adoption curve. Uptake in the U.S. has been faster than that for color televisions and cell phones. Today, 66 million Americans use broadband, up from 5 million in 2000.

But Horrigan notes that the slowdown in growth is not going to rectify itself, and that “policy experimentation,” perhaps in the form of a tweaking of the Telecommunications Act of 1996, may be necessary to kick-start growth.

My gut reaction is that there are bottlenecks in the Telecommunications Act that are preventing the market, especially the phone companies that still have one foot in the highly-regulated arena, from functioning as one would expect to bring prices down as volume increases. It may also be that the 2x-3x dial-up speeds of NetZero, basic AOL, and others are fast enough for many users, though I don’t see how anyone who spends more than a little time on the Net every day would be willing to put up with anything less than broadband. I also have to confess surprise that almost one-third of the country doesn’t use the Internet at all.

Other countries have adopted broadband to a much greater extent. Some Examples: Korea has by far the largest number of broadband subscribers per 100 residents (25); The Netherlands is next at 20; Canada is at 18; Japan 15; The US is at 13. Laggards include France and The UK, both at about 10.5.

One big unanswered question is how much personal broadband usage occurs at work, and whether having the broadband access at work justifies not having it at home (or perhaps not having any Intenet access at home).

On balance, though, it looks like we are laggards, and, as noted in the article, I would think it does not bode well for our long-term economic competitiveness.
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UPDATE: On the other hand, this AP report claims home broadband usage is growing nicely:

NEW YORK (AP) – More than 60 percent of Americans who use the Internet at home now do so with a high-speed connection, a new study finds.

That’s a jump from 51 percent a year ago. Nielsen/NetRatings says 86 million Internet users surfed the Web on home broadband connections in August.

Broadband use has grown steadily in the United States as prices fall and more video and other bandwidth-intent materials are available online.

“This continuing increase in broadband use is an essential step in a maturing Internet industry,” said Charles Buchwalter, the research firm’s vice president of client analytics. Broadband users tend to spend more time and money online, he said.

I don’t think the 60% AP vs. 53% Forbes difference is enough to move our standing the world standings by much, or the overall conclusion that we are still laggards.

Positivity: Notre Dame Coach Charlie Weis Lets Dying Child Choose First Play

Filed under: Positivity — Tom @ 6:10 am

Weis makes right call–Lets dying child choose first play (full box of Kleenex alert)

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UPDATE: China Repression with American Technology–On Smart Mobs, BBS, and SMS

Having read through Rconversation’s latest post, this much is clear: The Chinese government’s attempts at pervasive command and control are NOT solely aimed at news organizations and bloggers. The government is out to monitor and, where “necessary,” short-circuit the most basic everyday online communications between individuals and groups (“China: Fear of Smartmobs”; bolds are mine throughout this post):

China’s latest efforts to control online news are being sold to the Chinese public by the Chinese media as an effort to protect innocent citizens from swindlers, pornographers, and rumor-mongerers. But everybody in China I’ve been communicating with over the past 12 hours thinks the real reason has to do with fear of … smartmobs.

….. Chinese news reports make it clear that the regulations include internet bulletin boards (BBS, as they’re known in China) and SMS mobile text messaging. Should the regime be nervous about these technologies? You bet. After all, just a short flight away from Beijing in Seoul, South Korea sits a President who was elected thanks to a grassroots youth political movement galvanized by the online citizens’ media news site OhMyNews, but which couldn’t have been successful without the mobilizing power (of) chatrooms and SMS text messaging.

….. the number of forbidden content-categories has been expanded from 9 to 11, and all of those new categories relate to people’s ability to organize online.

….. in China, the internet bulletin boards and chatrooms are more powerful than blogs. Why? One big reason, he says, is because professional journalists use internet bulletin boards as a place to anonymously post stories their editors won’t publish because they were too politically sensitive. Putting them on a blog leaves the individual too exposed and too potentially traceable. So Chinese who want to find alternative news know that the BBS are where they’re most likely to find it.

….. all the independent bloggers were required to register their identities earlier this year. So from the government’s perspective the blogs have been sufficiently neutered. The BBS and SMS are what they fear.

….. The list of content that online news sites are not allowed to report includes “state secrets.” ….. people often find themselves in possession of documents (handed to them by officials) which are not marked anywhere as classified – but then they are busted for possession of them later. Charges of reporting state secrets could also be levied in this manner – as an excuse to nail somebody. This tactic has been used against plenty of Chinese conventional newspaper journalists in the past. We are simply reminded that online news organizations cannot escape. It could be extremely easy for a journalist to be nailed for posting “state secrets” on a BBS without knowing he or she had done so.

….. Now, before you argue that flashmobs aided by BBS and SMS may still ultimately prevail and bring democracy to China in the longer term, think again. It’s going to take a lot more than that. The Chinese Communist Party has learned to control the internet not perfectly, but well enough: Nascent opposition groups have been successfully prevented from using the internet to grow into any kind of national movement. Outside the Communist Party, there’s currently no viable alternative group of people capable of governing China. If an altermative is going to emerge from anywhere it will likely be from within the party itself.

The idea that American technology companies are willing participants in this repression is nauseating. CNBC’s Larry Kudlow notes the story (” Shame on You Yahoo!”), and laments its under-the-radar status.

Chicago Boyz’s Lexington Green makes some excellent points (“The Architecture of Repression”):

Too often libertarians defend this collaboration with tyranny because they apparently believe either that (1) private businesses should be allowed to do anything which is profitable, or (2) technology is per se liberating and that the Chinese government’s attempt to be repressive will inevitably be futile. The first is a moral judgment I disagree with, the second is a prediction based on historical evidence which I also disagree with.

Neither of these rationales can justify American firms creating and installing for a profit what Kopel accurately calls the “architecture of repression.”

If Ma Bell had installed phones in Russia during the Cold War, and in the process helped the KGB wiretap the Russian people to round up dissidents, there would have been howls of anger. What is happening now is no different.

China today is not as bad as the USSR was, and we do not want or need a new Cold War against China. But when the Chinese government behaves oppressively Americans should not make excuses for it, or worse, profit from it. They should complain about it, loudly and publicly. If this embarrasses the Chinese government, good. When someone does reprehensible things, public disgrace may be a way to stop or limit the conduct. If this means that the Chinese will retailiate in some way, so be it.

Assisting the Chinese Government to create a state-of-the-art tyranny does not hasten the day when China will be a “normal” country which allows basic human rights like free political speech. Establishing principles and insisting that they be met will work much better.

There are very early signs that people are becoming convinced that this is more than a little important. But Lexington Green theorizes, in my opinion accurately, that there is a great deal of vested interest on both sides of the political aisle in continuing to ignore the problem:

Why this is not provoking more outrage is an interesting question. Business-minded Republicans don’t want to do anything which will risk trade with China. Why liberals say little about such bad behavior is less obvious. Possibly it is simply that opposing China in any way is a position which is associated with the hawkish wing of the GOP….

I disagree with Green in this sense: the lack of liberal objections to China’s repression is not at all “less obvious.” Liberals have an 80-year track record, dating back to before Pullitzer Prize-winning Stalin propagandist Walter Duranty, of ignoring and excusing Communist murder and repression (see: Fidel Castro). Why would these fourth-generation leopards change their spots now? Unfortunately, the better hope for action is on the right side of the aisle, but it would mean risking the wrath of not only the American technology sellouts, but also companies like WalMart and Home Depot that seem to have quietly adopted “China-first” purchasing policies over the past decade.
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Previous posts:
- China Crackdown Continues: First Blogs, Now Internet News and Web Sites
- I Do Not “Yahoo!” Update: WaPo Weighs In
- I Do Not “Yahoo!” Follow-up
- I Do Not (and Will Not) Yahoo!
- The Bull in Oppressive China’s Shopping