Category Archives: business

Airband tech connects rural Maine

business, innovation, internet, technology

Twenty-three million Americans–about 39 percent of the population–do not have access to broadband internet. As one can imagine, the brunt of this need is felt most in rural areas. Lack of a reliable internet connection can have huge consequences for students, teachers, and entrepreneurs seeking to better their lives.

In late July of 2018, computing and software giant Microsoft announced as part of its Rural Airband Initiative that it would partner with RTO Wireless to provide broadband internet access to 290,000 people in rural areas of Western Maine and New York State. Microsoft has already pledged a partnership with Axiom, a local internet service provider in Washington County, to connect homes and businesses to the World Wide Web.

Using empty TV broadcast channels, known as “TV White Space,” Microsoft’s ISP partners can transmit broadband internet signal much farther than Wi-Fi signal. Microsoft India reports that TV White Space signal can reach up to 6 miles, whereas the reach of Wi-Fi is limited to only 330 feet.  

It is almost impossible to imagine the world today without the internet. Since its advent, the world has become much smaller. Today’s norm is near-instant global communication, access to enormous swaths of research and media, and attention of millions of potential customers, employers and investors. It may well be argued that internet access defines the age we live in today.

This is the reason why we cannot abdicate our responsibility as technological beings and cede to government the administration of internet service. Towns need not fall into the trap of a well-meaning but dangerously potent fiscal risk of a Government Owned Network (GON). A University of Pennsylvania study on the financial performance of 20 municipality-owned broadband networks showed 11 are cash-flow negative.  The authors write:

“For the nine projects that are cash-flow positive, seven would need more than sixty years to break even. Only two generated sufficient cash to be on track to pay off the debt incurred within the estimated useful life of a broadband network, which is typically projected to be 30 to 40 years.

These results suggest that municipal leaders should carefully consider all of the relevant costs and risks before moving forward with a municipal fiber program. Underperforming projects have caused numerous municipalities to face defaults, bond rating reductions, and direct payments from the public coffers.”

Some argue that this is the place for government: to take the risks that the market will not, to incur debt in order to provide a service that the public needs. This observer would note that incentives matter, and government infrastructure projects–however well-intentioned–could not, and in reality do not, match the private sector in quality of service or overall cost.

In fact, cost comparisons for rural broadband infrastructure show TV White Space is well ahead of “Fiber-to-the-home” or other methods of transmission favored by town managers.

Once a municipality splurges its funds on broadband infrastructure, it is unlikely that administrators will take into account newer, more efficient technologies of providing the same service. What if a municipality has already paid to establish a network through conventional methods of distributing broadband signal across a ten square-mile town? No doubt that a “TV White Space” network would cover more customers with fewer towers and lower transmission costs, but the short-sighted town administrators opted for the best they could see in the moment. No such incentive exists for governments to move quickly to adapt and accept innovation.

In many ways this debate is much like the debate over so-called “Net Neutrality,” in which proponents argue for heavy-handed public regulation, treating the service as a public utility instead of allowing the interaction of competing wants and needs of providers and customers through markets. We forgo the unseen benefits of future innovation and instead embrace the superficial feeling of “doing something” in the present.

This the inherent problem of government “investments,” especially ones that concern rapidly-changing technologies.  

And this is the benefit that markets give us: each of us does not have to know everything.

Prices are the signals. All of the distributed knowledge in a particular market is distilled into the prices we see, thus eliminating the need for complete information at the individual level. This is the defining characteristic of a market that no government or centralized decision-making institution can replicate.

Internet access is the great equalizer that Net Neutrality and GON proponents claim. The problem with their argument is that they assume that government won’t screw it up.

Open markets can help bridge the digital divide

business, government, innovation, internet

Many would agree that consistent access to the internet is an important part of life in 2018. It is crucial to participate and thrive in the global economy. We should do all we can to empower broader access to this “great equalizer,” especially because there are those who aim to slow the march of progress.

This summer, agency officials from several states, as well as companies like Alphabet (owner of Google), Facebook, and Amazon, filed suit against the FCC demanding reinstatement of the regulations known as “net neutrality.”

“Net neutrality” is not merely how its supporters explain it: the regulation of large internet service providers (ISPs) to treat all types of data traveling through their lines as equal and prohibit paid “fast lanes” for internet access. Its effects are more far-reaching than that. It means treating the transmission of internet as a public utility under Title II of the Federal Communications Act of 1934. Before, and since the FCC repealed the Obama-era rules, ISPs are classified under Title I, which regards the internet an “information service” rather than a utility. Because of this action, companies in that space are subject to a looser regulatory structure.

If you love the internet, lighter regulation is a good thing. It provides companies with greater incentive to invest in infrastructure and innovate. In the last 10 years, new technologies have been developed to enable more widespread connectivity, especially in underserved rural areas. From TV White Space administration to advances in small cell deployment of 5G mobile networks, private companies–with the blessing of the FCC–are finding better ways to connect us that will ensure America’s place at the forefront of opportunity.

Ajit Pai, FCC Commissioner

We must not let this moment pass us by.

Consumers, workers, and investors benefit when public servants understand the importance of maintaining an open and transparent market. Lovers of the web should commend Ajit Pai, chairman of the FCC for his efforts to cut out unneeded bureaucracy and preserve incentives for ISPs to invest in their systems. These reforms benefit real people. Lower costs in the market mean lower prices for customers, more innovative technology and increased infrastructure investment (a.k.a. jobs). An open market means a more connected world, which empowers more people to pursue their passions and interests, to explore new cultures and ideas, and to participate in economic growth.

The more we can do to empower industry to solve issues of reliable coverage, the quicker we can bring vital connectivity to underserved areas and enhance the ability to start and grow a business, study for school, facilitate medical access in remote areas or communicate across continents. For those of us living in areas of strong and reliable internet access, these are aspects of life that are so ubiquitous, we almost take them for granted.  It is remarkable that our expectations have changed so quickly, since it has been not more than 30 years that some of the public has had access to the internet at all. In much shorter time than that we have had wireless access on mobile devices.

It can be very difficult to make the case for freer markets because we cannot predict precisely what will happen, but that’s the point. Those skeptical of capitalism will point to this uncertainty and say that companies will neglect their customers in pursuit of the slimmest profit and higher pay for executives. What a painful vision of human nature to inherit! It is ridiculous to assume that a corporation will snub customers while it has to compete for those same customers. If people have choices, companies must compete and they will become more accountable.

The market for internet today is less than ideal. It’s most likely that your ISP is one of a small cohort of cable companies dividing up territory in which they provide exclusive access. This is what both free market supporters and skeptics are trying to avoid, and is the best reason to open the market for internet service providers.

Supporters of “net neutrality” do not understand that further restrictions on these companies (current and future) will end up blocking competitors from entering the market and potentially offering cheaper and better service. By treating internet connection like a public utility, we decide–with substantial hubris– that we have the best answer at the present moment. We double down on a potentially inefficient solution to a crucial part of life.

The companies seeking protection from competition–the “rent-seekers”–are only those large companies who have the legal resources to lobby regulators. They are the only ones who can leverage the immense power of government to their advantage. Make no mistake, this is not capitalism.

This is corporatism: the collusion of government and private industry.

To eliminate this phenomenon, we should reduce the power held by government these rent-seekers seek to exploit. They would not spend so much on lobbying if it didn’t work. Get rid of the looming power of the state, and you will see the money spent to influence that power start to wane.

The best safeguard against corporatism and corruption is diffused, lighter, and less-centralized government power. Restoring “net neutrality” would concentrate that power in government, and the only beneficiaries will be the companies who can afford to go to the dance.

This piece was first published in The Maine Wire

Lessons in disruption: 19th century edition

business, government, innovation

Today’s world in many ways is at a crossroads, especially as technology continually reshapes the economy and specifically models of service delivery. Think Uber, Khan Academy, and even Bitcoin. New and exciting ways to innovate and disrupt capture our collective attention as we  wonder what the future could bring.

It causes one to wonder: how long can some industries insulate themselves from the coming storm and resist competition? How long can public services survive in a world where private, digital solutions move faster than government by orders of magnitude?

There were other Americans in history who faced this challenge, but the major players are still the same. Would the visionaries of the 19th century (considered by some at the time to be crackpots) have been able to fight the inertia of today’s massive bureaucracy?

The story of Lysander Spooner comes to mind. In the mid-1800s, he endeavored to provide a more efficient method of delivering mail than the early Post Office. He was repeatedly targeted and punished by the U.S. Federal Government for his efforts.

Spooner was born on a farm outside Athol, Massachusetts in the frigid January of 1808. The family were outspoken abolitionists, and as a young man, Lysander Spooner immersed himself in the law, clerking under future Chief Justice of the Supreme Court, Charles Allen. He became an activist for many causes related to individual liberty, which led him to confront the United States Postal Service and its shoddy work.

Spooner succeeded in his early efforts to provide a better mail service at a lower cost. In 1844, postal rates had become so expensive, Spooner determined competition was sorely needed. It cost 18 ¾ cents to send a letter from Boston to New York and 25 cents to get it to Washington D.C. A letter sent from Boston to Albany, written on a quarter-ounce sheet of paper cost almost as much as the Western Railroad’s freight charge to carry a barrel of flour along the same route! To answer this, Spooner offered to carry letters daily in between each of the early American hubs: Baltimore, Philadelphia, New York, and Boston (twice daily between Philadelphia and New York)–for only 6 ¼ cents per half-ounce letter. He audaciously dubbed his outfit the “American Letter Mail Company.”

He was fiercely targeted by Congress and the Postal Service for usurping their de facto monopoly on letter delivery. Multiple suits were filed against Spooner and his rebel cohorts for infractions like using Postal-owned railways for his letter-carrying, but the courts absolved him and even expressed doubt that the Federal Government could monopolize mail delivery under the Constitution.

By mid-1845, Congress saw no other option than to lower rates. It was decreed that any letter weighted under a half-ounce and delivered within 300 miles would only cost 5 cents. Spooner was making a measurable impact on the cost of mail delivery for early Americans, demonstrating a real-world need for competition. He lowered his rates in turn, but by 1851, Congress had enacted multiple protections on the government monopoly of mail, included the power of the Post Office to declare any local road a post road. This move crippled the American Letter Mail Company, and the handful of other private mail carriers still in operation, that Spooner had to disband it.

He died in 1877, and not much has been told about him since, but his story bears remembrance. Like so many innovators and entrepreneurs today, Spooner faced the prospect of a government so cumbersome, yet so protective of its own power, that an existential threat from a more nimble, more efficient private actor meant he had to be quashed.

Technology entrepreneurs–the disruptors–are needed now, more than ever to challenge the status quo across the economy. From goods to services to software, Americans are demanding more responsive, individually-tailored service. Who among us believes that our government agencies today would thrive under new competition from an army of 21st-century Lysander Spooners?

This piece was first published in The Maine Wire