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Cable Vs. Internet: A TV Fight

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Old 07-12-2009, 08:00 AM   #1
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How else would you expect the cable companies to feel if the Internet after plundering the music industry, Hollywood and newspapers becomes the dominant delivery system for television programming in the United States?
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Old 07-12-2009, 12:11 PM   #2
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The story is interesting... although a little shallow, to be honest. First off, the author's drawing of an analogy between the music industry and the newspaper industry is over-simplistic, at best. Yes, both have been hit by competition from on-line sources, but to say that both were affected in the same way is nonsense.

The music industry took on a traditional 'we own the industry now' type of mentality, where (sad to say) too many businesses have trouble learning from history. You really can't fight that type of paradigm shift - doing so MAY work in the immediate future, but over the long-haul, better business models are just too hard to stop. Businesses that attempt to prevent that paradigm shift end up getting buried by it.

The music industry had a real opportunity to capitalize from the internet. Instead, they kept CD prices ridiculously high, practically begging for an alternative industry to crop up. Instead, they should have been looking for ways to make the new paradigm work for them.

Newspapers are a somewhat different story - their history with the internet making them obsolete isn't the same as what happened to the music industry. They DID attempt to adopt the new techology, but they've done so in a pretty ineffective way. In a sense they suffered from some of the same myopia that the music business did. Newspapers attempted to merge printed content with on-line, treating the former as their bread and butter.

Read columnists today who lament the shuttering of traditional newspapers, and you have to wonder what they're thinking. Their business (by 'they' I mean these newspaper columnists) isn't in selling newspapers - it's in writing stories. The distribution of their columns really should be a 'don't care' from their perspective - as long as they get the royalties for their columns why do they care if their story is in print or on line?

So in a sense, both newspapers and music suffered from a skewed view of what the internet really could mean to their respective business models, although music (which is more analogous to TV service) could have been a big beneficiary of the change in technology if they hadn't tried so hard to pretend that the technology really didn't exist.

The point is - cable companies NEED to figure out how to embrace the internet instead of trying to fight it. If they fight it, ultimately, they will lose.
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Old 07-12-2009, 03:06 PM   #3
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I fail to see it that way at all. Right now cable companies and telco's are engaged in a last man standing race to kill each other off as that content delivery pipe that delivers Television, internet, and phone services, and then, if they dominate, they will have monopoly dictatorial powers of what media content they choose to transmit or choose not to transmit and thus dominance over the entire creative media. While being able to charge whatever they feel like.

Worse yet, that high investment stake game is only being waged in a handful of cities, wonderful for the 5% of the American people who benefit from being able to pick and choose their providers while multiple providers still exist, but bad for the 95% of Americans who do not benefit because all investments dollars to provide an increased size data pipe only goes to that 5%.

The gap between the haves and have nots gets bigger and bigger.
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Old 07-12-2009, 09:03 PM   #4
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So far Comcast has been the only player. We had to have a election to let AT&T join the game. They are laying fiber all over the place. Kind of looking forward to the fight.
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Old 07-13-2009, 05:30 AM   #5
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I fail to see it that way at all. Right now cable companies and telco's are engaged in a last man standing race to kill each other off as that content delivery pipe that delivers Television, internet, and phone services, and then, if they dominate, they will have monopoly dictatorial powers of what media content they choose to transmit or choose not to transmit and thus dominance over the entire creative media. While being able to charge whatever they feel like.

Worse yet, that high investment stake game is only being waged in a handful of cities, wonderful for the 5% of the American people who benefit from being able to pick and choose their providers while multiple providers still exist, but bad for the 95% of Americans who do not benefit because all investments dollars to provide an increased size data pipe only goes to that 5%.

The gap between the haves and have nots gets bigger and bigger.
I'm sorry, but you must have a pretty strange view of reality to look at the increase in competition, across-the-board, and see consumers getting screwed. I'll use my area as an example. When my wife and I got married, 15 years ago, and moved into our current home, we had exactly 2 choices for TV service - OTA and (at the time) Suburban Cable. That was it. Today? Today I have access to cable (Comcast - who bought out Suburban), DirecTV, Dish Network, OTA, and FiOS. Not to mention all the choices that I now have on-line.

Speaking of which, I have more on-line choices than I did back then too (dial-up, Comcast, FiOS). Ditto for phone service - at the time it was just Bell Atlantic (which became Verizon) - there was no major deregulation of the phone industry at that point yet (no phone competition). Today? Again, I can choose my provider (Verizon, AT&T, et. al.), I can go VoIP (e.g. Vonage), or go fully cellular.

Sorry, but when I see how much things have IMPROVED over the last 15 years, I have a real hard time seeing the world that you do.

Next, that 5% figure is patently silly. Systems like DirecTV and Dish Network are national - as long as you have a clear view, you can get their service. You now have FiOS and U-Verse moving quickly into many areas (I hate to break the news to you, but combined those two services alone hit much more than 5% of the population). Now you have the advent of IPTV. I guess I just don't understand how you can really look at all that and honestly say 'yep, consumers are getting the shaft!'

Today there is MORE competition than ever before. If companies are fighting each other for your money, that's a GOOD thing. You see it as the ultimate grudge match where company A is going to take down company B, so they can rule us all! Please. When these companies compete, we all benefit - just look at the insane deals that Comcast is offering in my area to get customers. Think they're doing that because they're some altruistic charity? Um... no. It's because Verizon is eating their lunch in this area (and to a less extent DirecTV and Dish are too, but they didn't have the same impact in the Philly area that FiOS has had so far).

I love the mentality that these companies are just trying to pretent to be the Borg so they can take over. The truth is, the industry is changing. At one time you had a cable company, and you had a phone company, and never the twain shall meet. Today? What distinguishes one from the other? I mean both provide similar services - video, internet, and voice service. Is that bad? No... it's good. It just means that the landscape is changing. At one time it made no sense for phone companies to offer video. Today, with the improvement of technology, it does. Cable moves into telco turf, and vice versa.

One last point - check out the business pages some time. What has Verizon done recently? Why they've divested (aka sold off) a large chunk of its system! First to Fairpoint (in parts of New England) and now to Frontier (in many southern, midwestern, and western markets). Please explain to me how a company can both divest, and take over the world at the same time? Hmmm.... Why did they do that, then? Could it be that their business is changing? Why yes! That's it! Instead of focusing on phone service, Verizon (and AT&T) NEED to move into video in order to survive. That also means that their footprint - the areas that they serve, will necessarily change.

The end result, though, is MORE choices, better service, and lower prices for everyone.

Edit - one last point - in terms of where that high investment in techonology is happening. There was an article recently - do you realize that Fargo is getting DOCSIS 3.0 before NYC? What?! How can that possibly be!? How can a more rural area get the fastest cable HSI speeds? Because they are. This notion that only urban areas are getting the investment is nonsense.

Last edited by JPL; 07-13-2009 at 05:34 AM.
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Old 07-13-2009, 06:40 AM   #6
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My experience is a little different than JPL's. When I moved in 16 years ago, I had two television choices, OTA and satellite. Today I am limited to those same choices.

Worse yet, in terms of internet, its still dialup or very pricey satellite. There are a few outfits playing with WImax, but none close enough to reach me. I would be thrilled if my telco, AT&T, would get off their dead
butts and get me even vanilla dsl, but all there money is going to getting Indianapolis completely wired for uverse.

And I live only 30 miles from the State Capital Building in Indianapolis
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Old 07-13-2009, 07:56 AM   #7
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My experience is a little different than JPL's. When I moved in 16 years ago, I had two television choices, OTA and satellite. Today I am limited to those same choices.

Worse yet, in terms of internet, its still dialup or very pricey satellite. There are a few outfits playing with WImax, but none close enough to reach me. I would be thrilled if my telco, AT&T, would get off their dead
butts and get me even vanilla dsl, but all there money is going to getting Indianapolis completely wired for uverse.

And I live only 30 miles from the State Capital Building in Indianapolis
I'm sorry that your choices aren't as plentiful as mine, but still your argument doesn't hold. Just because some areas are slower at getting newer products/technology, does not mean that company A is looking to take over the world. Your area isn't changing fast enough for you? I get that - but that doesn't mean that some company is going to take your cable company down, and will set up dominion over your section of the world. One doesn't follow the other.

The thing is, new technology is expensive. It costs alot of money to roll out fiber, e.g. As a result, companies first go to areas with the fastest ROI. Without it, they go out of business and then no one has the advanced technology. But once they recoup that ROI, they then have a positive cash flow. Also many of the R&D costs are paid for by the early adopters of the technology. As mass-production kicks in, prices drop, because the R&D costs are distributed over more consumers, and eventually the R&D costs are totally recouped.

Companies HAVE to go to where the consumers are to make that happen. If they didn't - if Verizon started rolling out FiOS everywhere, e.g., no matter the population density, they would likely never recoup the initial outlay of money, which causes them to drop FiOS entirely.

Think of any technology out there - any new technology. What was the cost like when it first rolled out? What's it like now? I'll point to my TV. I got my HDTV (not a real big one) in 2007, for just under $900. The last I checked (a few months ago), the equivalent model today (the newer version of the same model) was out there for about $600. That's a 33% drop in about 18 months. That's what happens. How much were HDTVs when they first rolled out the door? Could you even get one for less than $1000? I don't think so. But because you had some people with more money than they knew what to do with, you had a market created for HDTVs.

You say that things didn't improve for you? I disagree. I'll prove it to you. A few months after I got married, I saw my first DBS setup. It was at a department store (Strawbridge's in Exton, PA). For a single LNB dish with a single receiver, the price was pretty steep - about $1000. And that didn't include installation. Basically, it was way out of my price range at the time. It was available... but really not to me, or anyone I knew.

How much does a set-up run now? Do you pay anything up front? Nope. You can get a 5-LNB dish with DVRs, and multiple receivers, up to 4 rooms installed for no money up front. Think that opens up the technology to some people? I bet it does. I'll bet that DBS is ALOT more open to people today than it was when you first moved into your house.
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Old 07-13-2009, 03:11 PM   #8
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Please JPL, do some thinking while doing the math.

In my case, I am basically 18,000 feet from a central switch. Even a reduction of 3000 feet of crap copper would be all it would take to get me at least vanilla DSL.

Now examine what it takes for AT&T to get that 15,000 feet DSL limit down to the 2000 feet needed to offer uverse in a big city while the amount of Fiber optic needing to be strung goes up with the square of the distance. 15,000/2000=7.5 and 2 to the power of 7.5 is 181 times more expensive. Factor in much greater city install costs with all the roads and other buried services to be dodged is far more expensive in a densely populated area, and we have to wonder what is going on here? And how socially unfair it is. The only rational explanation has to be to crush the competition and we all know what would happen to prices thereafter.

Add in the fact that cable companies had prior no compete agreement with cities, if the courts uphold those agreements, all the telco investments will be basically worthless while they pass those costs to the consumer.

No matter how you cut it, 5% benefit and 95% get screwed.
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Old 07-13-2009, 05:16 PM   #9
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Please JPL, do some thinking while doing the math.

In my case, I am basically 18,000 feet from a central switch. Even a reduction of 3000 feet of crap copper would be all it would take to get me at least vanilla DSL.

Now examine what it takes for AT&T to get that 15,000 feet DSL limit down to the 2000 feet needed to offer uverse in a big city while the amount of Fiber optic needing to be strung goes up with the square of the distance. 15,000/2000=7.5 and 2 to the power of 7.5 is 181 times more expensive. Factor in much greater city install costs with all the roads and other buried services to be dodged is far more expensive in a densely populated area, and we have to wonder what is going on here? And how socially unfair it is. The only rational explanation has to be to crush the competition and we all know what would happen to prices thereafter.

Add in the fact that cable companies had prior no compete agreement with cities, if the courts uphold those agreements, all the telco investments will be basically worthless while they pass those costs to the consumer.

No matter how you cut it, 5% benefit and 95% get screwed.
Do what math? You're making totally contradictory statements. On the one hand, competition is unfair and destructive, and on the other you don't have enough choices... care to clarify how all that jibes? It just makes no sense. Also, it looks like we tend to be a tad narcissitic, huh? Because YOU don't have all those options, then all these companies are out to screw everyone? Again, please explain how that follows.

Next up, now companies are required to be socially responsible? Huh? Companies are private entities. No, they're not saints, but guess what... they're not sinners either. They go to where they can make a profit. They become socially responsible when it's profitable for them to do so. Do you really want these companies to be focused on social responsibility? I don't. I WANT them focused on making a profit. Why? Because in this country, you don't make money by holding a gun to someone's head (well, not legally anyway). You only make money if people buy your product. And people will only voluntarily buy what they want or need. So, by them focusing on their bottom line, they're focusing on meeting the needs/wants of their customers. Again, explain to me, please, how in the world that can possibly be a bad thing.

Ever stop to think that there may be a reason BEYOND these companies that are preventing them from rolling into your backyard? Could it possibly be... government that's stopping them? I don't know your area, but if I had to put money down on it, I would give odds that the fault is with your locale. I've seen that so many times that it's no longer a surprise. These locales attempt to play hard-ball with some of these companies.

You mentioned AT&T being in your area. You know that Verizon is also rolling FiOS out in Indianapolis, right? Well, they're being sold to Frontier, but the point remains - both companies are actively rolling out their services in your state... and in fact, probably not far from where you live. And yet, you're area doesn't have either. Odd, huh? Don't think that happens? There's a township in this area where some local representative was responsible for preventing FiOS from rolling TV service into the area. It's not an issue of economics - the township has FiOS internet service, but no TV. Why? Because this jackass politician is holding up the franchise agreement. Why no invective directed at government?

Look at the state of MA - the state legislature decided to play hardball with Verizon, so Verizon basically told them 'give us a call back when you learn to act like adults.' They stopped their roll-out in the state, entirely, and focused on other areas that weren't jerking them around.

See, in a free society companies are legal entities - no different than you or I. They have the ability/freedom to chart their own course. What makes it all work comes down to incentive. You look out for your own best interests, and they look out for their's. It's the intersection of those interests that push business decisions. More or less what Adam Smith called 'the invisible hand'. Take that incentive away and things fall apart. Companies and individuals lose the incentive to produce, and nothing progresses.

Besides, you should do your own math. Look at the cost of say DBS service when you first moved into your house. Look at it now. That reduced cost enables you to have that option. It's something that came about because these companies followed a normal, sane, business model.
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Old 07-13-2009, 08:36 PM   #10
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JPL is a total liar when he states, " Besides, you should do your own math. Look at the cost of say DBS service when you first moved into your house. Look at it now. That reduced cost enables you to have that option. It's something that came about because these companies followed a normal, sane, business model."

Get a clue JPL, I would love to have even a vanilla DSL option from my monopoly phone service provider which is AT&T, AND I DO NOT. Please get your facts right.
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Old 07-13-2009, 11:02 PM   #11
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Internet on the USA side is not ready to handle the huge demands require to broadcast media (radio, tv, music an etc.. also including phone with video). Maybe one day. Still have to get into GB or TB for download and upload speeds for every household. To many still on dial-up and low broadband usage.
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Old 07-14-2009, 05:22 AM   #12
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JPL is a total liar when he states, " Besides, you should do your own math. Look at the cost of say DBS service when you first moved into your house. Look at it now. That reduced cost enables you to have that option. It's something that came about because these companies followed a normal, sane, business model."

Get a clue JPL, I would love to have even a vanilla DSL option from my monopoly phone service provider which is AT&T, AND I DO NOT. Please get your facts right.
I'm lying now?! What the hell did I lie about? Have DBS prices come down in the last 16 years? Umm... yes, they did. Did that give you an option that didn't exist when you first moved into your house? Why, yes, it did. What exactly am I lying about? I think you're confusing things here, dude. Because you don't have DSL in your neighborhood, I'm spinning falsehoods about DBS prices... yeah, that makes total sense.

Guess what? I don't have access to DSL either. That's right - this area, which you think Verizon has magically targetted because we're just crammed in like sardines (which isn't true, btw - Verizon didn't start rolling out in cities - they started rolling out in the suburbs, just like mine) didn't see fit to even give us DSL. It's still not available to us. For years the only option available to me was dial-up too. When we got that FiOS tag on our door, saying it was available, I couldn't call them fast enough to sign up (no way in hell was I giving my money to Comcast).

The one thing you haven't answered is: why? WHY are there so few options in your area? Call up your local government office, and find out. I'll bet you anything that the hold-up is more on the local government side than the fault of these companies. Or call AT&T and find out what the roll-out schedule of U-Verse is. Have you ever been involved with implementation of a large, complex system like, say, U-Verse? Think these things are instantaneous? The just wave a magic wand, and poof! Fiber is hereby rolled out to your area!? Sorry, dude, that's NOT the way it works. Know why Verizon could tell the state of MA to kiss it's butt? Because there were other fish in the sea - they're rolling out fiber at a break-neck pace in this area - while they were fibering up this area, you would see the spool trucks, for months, laying fiber. Even if they wanted to have all this area covered instantaneously they couldn't do it. It's just not possible. Believe it or not, it actually takes time to roll this stuff out.

They hit my neighborhood a couple months before they turned on the fiber - and that was just for internet. It was still another 11 months before they turned on TV service. Why? Because these big infrastructure type changes don't happen overnight. If you want to engage in some delusional fantasy that it's because AT&T doesn't want your money (PLEASE explain that one to me, btw... how does a company become a monopoly by screwing over 95% of the people out there - by refusing to serve them... um... last I checked, that's not how monopolies work - mono means 'one' - meaning that you have one company only serving a particular market - if you have NONE providing you DSL... how in the world does AT&T work the monopoly angle?) they're not hitting your area, you can. Conspiracy theories bore me, though. With all due respect - they're lazy. They involve no initiative on your part. It's all THEIR (whoever 'they' are) fault.
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Old 07-14-2009, 08:36 AM   #13
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JPL, you evidently do not understand how phone territories got allocated, or the subsequent history of what happened after the MA bell
monopoly was broken up, and the history of the new phone monopolies being reconstructed. Especially in the State of Indiana where the fool legislature and government was stupid enough to dismantle the State regulatory process.

I would love to have the choice of having someone, anyone, other than AT&T as my phone monopoly provider, but I would have to move my house to have it. There were a few companies that provided alternate psudo competition, but all they did is to lease the same rotten AT&T lines that are the problem and resell them to consumers at a lower price. And now even that has stopped as AT&T has crushed that competition.

Nor have you explained why AT&T is willing to spend 181 times more per customer to get them super duper everything, while not charging 181 times what standard DSL costs.
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Old 07-14-2009, 09:01 AM   #14
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JPL, you evidently do not understand how phone territories got allocated, or the subsequent history of what happened after the MA bell
monopoly was broken up, and the history of the new phone monopolies being reconstructed. Especially in the State of Indiana where the fool legislature and government was stupid enough to dismantle the State regulatory process.

I would love to have the choice of having someone, anyone, other than AT&T as my phone monopoly provider, but I would have to move my house to have it. There were a few companies that provided alternate psudo competition, but all they did is to lease the same rotten AT&T lines that are the problem and resell them to consumers at a lower price. And now even that has stopped as AT&T has crushed that competition.

Nor have you explained why AT&T is willing to spend 181 times more per customer to get them super duper everything, while not charging 181 times what standard DSL costs.
No, I understand things just fine. First off, the 1996 Telecommunications Act opened up the copper networks. You CAN have a different provider for phone service. However, reality being what it is, some phone company has to maintain your lines. That being said, there's nothing stopping multiple phone companies from coming in and setting up networks in your area. There are some cross-over areas where AT&T and Verizon are duking it out.

Second, I love the 'MA bell is coming back together!' argument. It's total nonsense. What is Verizon doing in your state? What are they doing in states like OR and WA? They're DIVESTING. They're selling off a HUGE chunk of their existing footprint to Frontier. This came on top of their divesting a large part of the New England network to Fairpoint. I said that I read these inconsistent arguments all the time - competition is evil... but we don't have enough choices! Or what you just put out there: Ma bell is coming back! How in the world can you have massive divestiture AND a re-emergence of a phone monopoly? You can't. It's just not possible.

You're also ignoring how the landscape has totally changed. At one time, if you wanted phone service, you had ONE option - ma bell. Today? Is that really the same? Nope. Now you can get phone service from your cable company... or from VoIP... or from cell... or you can pick your phone service provider. How in the hell is the environment even close to being the same as it was 20 - 30 years ago?

Today there is no 'cable' company... there is no 'phone' company. Their business lines are blurring. Cable offers phone service, and the phone company offers video. That's reality. They HAVE to do that to survive.

You're also lamenting the fact that you don't have DSL. Why? DSL is a dead technology. Why in the world would Verizon, e.g., roll out DSL in my area where I could maybe top out at 7Mpbs, when Comcast can offer me speeds STARTING at twice that? It makes no sense. They NEED to move to better techonology, or they get buried. While I disagree with the architecture of U-Verse, it really is a step up from traditional DSL. Why should AT&T continue spending money rolling out traditional DSL when it makes more sense for them to focus on U-Verse?

BTW, you decry the monopoly status of these companies. Question - HOW did they become monopolies? Did AT&T just set up shop in your neighborhood and declare itself king of the hill? Um, no. Government, the one entity that you seem to have no problem with, CREATED those monopolies. You look to government to solve this problem... when in reality government is more often the SOURCE of the problem. THEY created the situation in which you find yourself - if not the federal government, then most definitely your local government. Want to change that? You can complain all the live long day to AT&T, but I will bet you that if you just investigate it - just call your township/city hall and ask - that it's your local government that is more responsible for putting up the roadblocks necessary to keep the status quo.

In areas where FiOS has rolled out, most of those areas actually required legislative changes. Traditional government laws in those areas created legal monopolies. Even if Verizon was begging to roll into those areas, they couldn't at all until government moved on the matter and changed the law. That includes a vast majority of the area where FiOS is currently rolled out. The only area that they currently serve that I know about, that had cable competition before FiOS came along were parts of Virginia. That was it. And very small slivers of PA - where RCN competes with Comcast. But go to most of their footprint and what you'll find is that GOVERNMENT was THE obstacle to getting FiOS rolled out.
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Old 07-14-2009, 09:35 AM   #15
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At least JPL and I can find some agreement that government is part of the problem. Its just that I feel the government role is more needed, and that our government should be far tougher on the telco's.

In the many of the foreign countries who have far better broadband options than we have, that has been always the case, and those governments have taken a much stronger role and forced their telco's to act in the public interest while opening up competition. And also making sure all and not just a minority get the benefits.
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