Fiber Network: Is the Internet a Utility?

Fiber Network: Is the Internet a Utility?

The digital revolution has already happened, and to a large extent we live in an ever increasing digital world.  Our communities are no longer limited to the geographic space we inhabit.  Through digital services like Skype, Facebook, and LinkedIn we can build intimate and professional networks that span the globe and are just as meaningful in our lives as any of our more traditional “physical” relationships.  We have almost unlimited information available to us via the Internet and people use this information to help them determine their “next best steps” as it pertains to almost every facet of their lives whether that be which restaurant to try, or even if they should follow their doctor’s advice on the medical treatment that the doctor has prescribed to them.  People are also more and more utilizing to Web to fulfill their consumer needs.  Indeed, according to Allison Engright, editor at www.internetretailer.com, U.S. e-retail sales are expected to grow from $263 billion today to $414 billion by 2014.

Access to digital information via the Internet is no longer a luxury even as it might have been 10 – 15 years ago and it is not an understate to say that those who fail to embrace this reality are at a severe disadvantage both economically and socially.  The need for citizens to have access to the Internet continues to bring to the forefront challenges for local governments and private internet providers alike.  Namely, which is the best method to ensure that all citizens have access to fast, affordable, and reliable internet broadband?  Are these needs best served by private internet providers, or is the Internet today such a necessity that it should function as a utility much like electricity?

Currently, this is a question that is being debated by six northern Utah cities that are contemplating whether or not to continue to move forward with Macquarie Capital’s $300 million proposal to finishing building what is now known as the UTOPIA Fiber Network.  This proposal is controversial in part because of past performance problems with the UTOPIA Network and also due to Macquarie’s demand internet access in these member cities be treated as a utility and all citizen’s would need to pay a $18 – $20 monthly Internet Utility Fee in approximately three years when the network has been completed statewide.  This fee would be used to offset the cost of construction of the network and provide the on-going maintenance necessary to keep the network operational.(1)

This debate is not unique to Utah and the optimal pathway for broadband growth should be carefully considered as the country, and the State of Utah, looks to expand its broadband infrastructure.  For example, Chattanooga, TN offers municipal broadband to its citizens and this has been held up by proponents of a public utility model of what a successful implementation of this model can look like.  However, 20 states have placed limitations or outright bans on local governments building their own fiber network infrastructure.(2)  What should not be in dispute is the need for answers to these questions and a pathway to move forward in the most effective and rapid manner possible to ensure we are becoming more connected, because as according to the Wall Street Journal “…the U.S. currently ranks No. 26 in the world for average broadband download speed, right behind Estonia and the Czech Republic.”(2)

At B. Jackson Construction, we believe we can learn a lot of how on the best path forward towards a more interconnected fiber infrastructure by looking back at the history of electrification in the United States.  In the early part of the 20th century, electric power was largely concentrated in urban areas and served by investor-owned utilities or IOUs.  IOUs played a critical role in developing and constructing the complex and advanced electrical systems we take for granted today.  (Indeed, even by the end of the 20th century “…IOUs would still account for almost 75 percent of electric utility generating capacity in the United States, even as they came to be outnumbered by other types of utilities and non-utility power producers).(2) However, many of people who lived in rural areas where left out of the electrification process because it made limited financial sense for these IOUs to try and service scattered families and communities that were isolated by great distance from urban generating areas.(3)

To correct this disparity between Urban and Rural citizens, President Franklin Delano Roosevelt, created the Rural Electrification Administration (REA) in May, 1935.(3)  This agency provided loans and other assistance so that rural cooperatives could build and run their own electrical distribution systems.(3)  The REA went on to become one of the most important government programs of all time and paved the way for millions of Americans to get the power that they would have otherwise been denied and, to a large, extent, it paved the way for the rapid development of our country throughout the 20th century and today.(3)

We believe that the only way we will reach the “tipping point” necessary to build the truly connected fiber network that this country needs will be for private companies and local municipalities to work together to build fiber networks just like when the electrical distribution system was expanded in the early 20th century in the United States.  We believe that the only way to keep up with the ever rapid pace of this development will require the innovation brought through private companies and matched with the funding capacity that would otherwise not be available without some sort of public subsidy.  We believe that rather than limiting competition, this will ensure increased access to the Internet and Internet content and is the best way forward for us to allow all citizens to benefit from this fundamental resource and continue to ensure America is at the forefront of technological innovation.

References:

  1. Gurrister, Tim.  “UTOPIA savior plan to go to voters.”  Standard Examiner. Web.  6 August, 2014.  http://www.standard.net/Business/2014/08/06/UTOPIA-savior-plan-to-go-to-the-voters.html
  2. Mims, Christopher.  “Up Ahead: An IPO, an iPhone, an Internet Fight.”  The Wall Street Journal.  Web.  1 September, 2014.  http://online.wsj.com/articles/up-ahead-an-ipo-an-iphone-an-internet-fight-1409613955?mod=djem10point
  3. A Century of Innovation: Twenty Engineering Achievements that Transformed our Lives. Washington, DC: The National Academies Press, 2003.  Web. http://www.greatachievements.org/?id=2988

 

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