Verizon Actions Show Carriers Will Not Wire Rural America

In a recent post the NY Times Bits Blog, Saul Hansell reports "Verizon Boss Hangs Up on Landline Phone Business" - something we have long known. Nonetheless, this makes it even more official: private companies have no interest in bringing true broadband to everyone in the United States. Verizon is happy to invest in next-generation networks in wealthy suburbs and large metro regions but people in rural areas - who have long dealt with decaying telephone infrastructure - will be lucky to get slow DSL speeds that leave them unable to participate in the digital age. These people will be spun off to other companies so Verizon can focus on the most profitable areas. For instance, Verizon found it profitable to spin off its customers in Hawaii to another company that quickly ran into trouble before unloading most of its New England customer on FairPoint, moves that enhanced Verizon's bottom line while harming many communities (see the bottom of this post and other posts about FairPoint). Isen has been writing about it recently - picking up on FairPoint immediately breaking its promises to expand broadband access in the newly acquired territories. No surprise there. Isen also delved deeper into Verizon's actions, with "Verizon throws 18 states under the progress train." He is right to push this as a national story - the national media focused intently on the absence of major carriers in the broadband stimulus package but they seem utterly uninterested in major carriers running away from broadband investments in rural areas. Though Frontier likes to position itself as a company focused on bringing broadband to rural areas, it offers slow DSL broadband and poor customer service to people who have no other choices - more of a parasite than angel. As long as we view broadband as a vehicle for moving profits from communities to absentee-owned corporations rather than the infrastructure it truly is, we will farther and farther behind our international peers in the modern economy. Perhaps the most frustrating angle of these transactions are the many ways in which Verizon benefits from stranding thousands of communities. West Virginia is one of the states most impacted by the proposed Verizon-Frontier swap and has generated in-depth coverage of the story.

She [Elaine Harris of Communications Workers of America (telephone employees union)] believes the payoff for Verizon is it cannot only make money selling off its assets, but it can take advantage of a federal tax loophole that allows tax-free mergers between companies. The smaller companies are left saddled with debt and, as a result, can't make the necessary upgrades to existing infrastructure, turning off customers and ultimately leading to work force reductions as dissatisfied customers turn somewhere else.

Trying to figure out how to force absentee-owned, profit-maximizing corporations to bring true broadband to everyone ignores the reality of our market system: we are trying to force the square peg through the round hole. These companies may well invest in urban and suburban areas (though these areas continue to fall behind major cities elsewhere in the world) but they have no reason to invest in rural America. To get the job done, we need smart public investments to ensure everyone benefits from the communications revolution. When we expanded telephone and electrical infrastructure to everyone, everyone in the United States benefited because networks always become more valuable as they increase in size. More people on the network means increased markets, increased productivity, and a higher quality of life. Ensuring everyone has quality broadband is not charity for rural folks, it is in all of our self-interest. The narrow self-interests of Verizon, Frontier, and FairPoint (this is not a shot at them, companies are designed to have a narrow self-interest for legitimate reasons) do not line up with our larger national interest - something that too few people understand when dealing with broadband policy. This is a video offering good coverage of the FairPoint problems: This video is no longer available. Photo by Derek Jensen, used under creative commons license.