The Race For The Broadband Baton That No One May Want

Google (GOOG) announced that it will test “superfast” broadband in more than 50,000 households and will offer connection speeds that are in some cases one hundred times faster than current services. It is ironic that the search company would release that news at about the same time as the FCC reported that about 93 million Americans have no access to broadband service.

The people who do have access to broadband will get a faster internet, whether they want it or not in some cases. Cisco (CSCO) has decided it does not want Google to have the top of the speed pyramid to itself and announced that it is developing its own speed program in partnership with US broadband service providers, according to the FT. These are the same providers who see the Google initiative as a threat.

Cisco has plenty of reason to champion higher speed internet infrastructure. It makes the routers that make the internet work. Cable and telecom operators have reasons to increase connection speeds because they know that the FCC wants 100 million households to have 100-megabit internet access a decade from now. The drawback to current broadband providers as they increase speed capacity is that a faster internet is expensive to build and it is not clear that the federal government will allow them to recoup those costs through higher customer fees.

One of the facts that stood out in the FCC report was that millions of Americans do not want broadband. They either consider the internet useless at least at speeds faster than the ones they have now, if they have them at all. In describing them the agency wrote “19 percent of non-adopters, or 15 million adults, said they do not have broadband because they say that the Internet is a waste of time, there is no online content of interest to them or, for dial-up users, they are content with their current service.”

The FCC and Google and Cisco believe that faster broadband is either good for the Republic or good for business. Neither may be the case. Most people do not need a 100 megabit connection even if they use the internet to download files or watch video. The usefulness of ultra-fast broadband, especially if it carries ultra-high fees, has not be proven.

The fast connection issues ranges beyond wired broadband. Sprint (S) is gambling its future on 4G WiMax wireless service which will be substantially faster than current 3G service. It is not obvious that people with cellphones want a way to get information from the internet more quickly. AT&T (T) and Verizon Wireless, which will use the LTE standard which competes with WiMax, do not seem in any hurry to get their services deployed.

Suppose they gave a party and nobody came? Faster broadband services may find they have a dearth of customers.

Douglas A. McIntyre