Washington, DC, January 31, 2012 --  

Rapid innovation is driving congestion on America's data networks. Lack of innovation threatens to keep it there.

When Sprint CEO Dan Hesse recently admitted that its wireless network was throttling the data speeds of its heaviest users, the last bastion of unlimited data in America fell.¹ In the five years since the iPhone took the world by storm, data use has exploded, surpassing voice traffic on America's wireless networks two years ago,² and now far exceeding it.

America's wireless carriers have responded by capping data downloads on mobile subscribers' monthly plans. They're either charging extra for going over a limit (like AT&T and Verizon), or charging a fixed rate, and markedly reducing the download rate after going over a limit (like T-Mobile and now Sprint.)

This may make business sense for carriers to maximize revenue and minimize costs, but it is a huge barrier to innovation that relies on economical high-speed data.

Apple and Android phones have spawned a new market for data-hogging mobile apps that can often be true game changers. Google Maps, for example, has revolutionized local travel. Since its mobile release, I almost never check directions or even look up my destination is before walking out the door. Similarly, Pandora's personalized music service has made listening to "radio" pleasurable again, without the need for an expensive satellite subscription.

Unfortunately, America's wireless carriers see heavy users of data-hungry apps as a problem, not an opportunity. As Sprint's Hesse says, "For people that want to abuse it and really run up the big data charges, we can knock them off." In a country that prides itself on inventing both the internet and the smart phone, demonizing folks who use these inventions to their fullest is almost un-American.

The real solution is to expand network capacity. Mobile carriers must stop kvetching about heavy users and get to the business of building new towers. And because there are physical limits on the radio spectrum, many analysis agree mobile networks must be augmented by a technique called data offloading. This means using WiFi and localized cell networks called femtocells to assist providers when subscribers are at home or in high usage areas.

But data offloading relies on broadband land lines, which have major problems of their own. The corporate decedents cable and phone monopolists almost universally own America's wired internet lines. And given the monopoly heritage of these companies, they are typically inclined to squeeze subscribers for every cent that regulators allow than to deliver improved and more competitive services.

Unfortunately, that's exactly what the Federal Communications Commission lets them do. In the 15 years since the 1996 Telecommunications Act was supposed to open up the industry, the FCC has repeatedly bowed to monopolist interests and retreated on plans to force utilities to open their lines to competition. ³

The end result is troubling. Despite being the unrivaled world leader in Internet and mobile innovation, America ranks 23rd among developed nations in terms of broadband adoption and 13th in terms of broadband speed.⁴ A 2010 GAO study found that it was price, not availability, that was holding back Americans from adopting broadband⁵. Without competition, there isn't competitive pricing.

Recognizing this deadly impediment to its innovation, Google announced plans two years ago to enter the business of fiber optic internet service. It chose Kansas City for a pilot project, but has found itself in a quagmire of delays fighting the local government and utilities over access to rights of way on poles.⁶

Such continued impediments to delivering economical high-speed internet service to Americans whether wired or wireless are unacceptable. As Americans worry about high unemployment and jobs shifting overseas, it is crazy to allow governments and government-granted monopolists to continue to block competition in an area so key to America's most innovative niche.

Delivering a world-class wireless data networks and wired broadband networks must be a national priority. Americans must force lawmakers and the FCC to open the system up to competition. Given the rotten state of mobile and internet service companies in America, fresh blood is long overdue.

Related Web Columns: The Bleeding Edge of Wireless, December 28, 2010

Notes:

1. PC Magazine, Sprint's Data Plans Not Quite "Truly Unlimited", January 6, 2012

2. Government Computer News, Mobile Data Volume Exceeds Voice Traffic for the First Time, April 2, 2010

3. Sonic.net CEO Blog, America's Intentional Broadband Duopoly, September 2, 2011

4. GigaOhm.com, Global Broadband Zooms, U.S. Penetration Over 80 Percent, January 12, 2012

5. The Hill, GAO Says Broadband Costs, Not Availability, is Hindering Adoption, October 12, 2010

6. Network World, Google Fiber Falters in Kansas City, January 20, 2012