The Last Mile: Streaming’s Bottleneck

The battle over who gets to be the gatekeeper has been fought vigorously by cable and telcos alike, Hayes recounts. Rockford, Illinois "tried last year to pass a referendum to lay fiber to the home," says Hayes. "The cable TV company spent $600,000 to get this killed." According to Hayes, cable and telecommunications companies, who would be shut out of infrastructure ownership as a result of local government’s taking the initiative in setting up their own fiber optic networks, have launched public relations campaigns against some cities’ fiber optic projects. Or they just bring the issue to court (what Hayes calls "excessive lawyering") by raising the specter of potential cost overruns and questioning the ability of cities to manage such large-scale projects. Another example of Hayes’ reference to excessive lawyering comes from Hollywood, where copyright owners are still wary of how ultrabroadband might feed what they see as the rampant piracy of their content.

With cities across the country looking into sponsoring fiber initiatives, a handful of companies, including the Merton Group and Wave7 Optics, Inc., are assisting these cities in a way that’s akin to the early days of cable. "They’ll finance [fiber optic initiatives], put it in, and then pay the city," says Hayes. While the city won’t own the network, he also says it won’t cost them anything. "Plus they get the advantages [of fiber] without having to deal with the local phone or cable companies."

Even though only the government has the power to embark on a nationwide fiber optic campaign, Hayes strongly speaks out against much, if any, federal government involvement in getting cable into the ground. "There’s virtually no technical knowledge in the government," he argues. "Secondly, it’ll be politicized. The [federal] government is the absolute worst group you could have doing this. Leave it to local governments. The best possible way to do it is take it to the lowest possible level of the government."

The South Korean Model
On the other hand, in countries like South Korea, national government has played an integral role in dramatically increasing the number of homes with access to fiber optics. In the mid-1990s, Korean regulators set goals for broadband adoption: all big office and apartment buildings had to have a fiber connection by 1997, 30% of all households would have access to broadband through DSL or cable lines, and by 2005 more than 80% of households would have access to 20Mbps connections or faster, according to CNET.

Nowadays, the average South Korean residential user has ready access to 8-10Mbps Internet connections for the same relative cost as DSL or cable. The government has also spearheaded a $24 billion initiative to link all government facilities and public institutions with a national high-speed fiber backbone. Internet training was made available to those who may have been left behind in the digital age, CNET reported, including stay-at-home moms and disabled citizens. To encourage investment in bandwidth, the government set up a certification program to rate buildings based on the quality of their data lines; the more robust the connection, the more a developer can charge for rent—Internet access is increasingly being bundled into rent.