Factually! with Adam Conover - Why Is America’s Internet So Slow? with Susan Crawford

Episode Date: December 2, 2020

Harvard law professor Susan Crawford joins Adam this week to discuss why America - the country that invented the internet - struggles to provide access to affordable, high-speed internet. She explains why just a few telecom companies monopolize the industry, fiber vs. wireless, the real deal with 5G, and why the internet should become a public utility. Learn more about your ad choices. Visit megaphone.fm/adchoices See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

You know, I got to confess, I have always been a sucker for Japanese treats. I love going down a little Tokyo, heading to a convenience store, and grabbing all those brightly colored, fun-packaged boxes off of the shelf. But you know what? I don't get the chance to go down there as often as I would like to. And that is why I am so thrilled that Bokksu, a Japanese snack subscription box, chose to sponsor this episode. What's gotten me so excited about Bokksu is that these aren't just your run-of-the-mill grocery store finds. Each box comes packed with 20 unique snacks that you can only find in Japan itself.

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So if all of that sounds good, if you want a big box of delicious snacks like this for yourself, use the code factually for $15 off your first order at Bokksu.com. That's code factually for $15 off your first order on Bokksu.com. I don't know the way. I don't know what to think. I don't know what to say. Yeah, but that's all right. Yeah, that's okay. I don't know anything. Hello, everybody. Welcome to Factually. I'm Adam Conover. And you know, America invented the Internet, right? I mean, we're often pretty braggadocious as a country, often unfairly so. But in this case, we really can take the credit for one of the most incredible technological advancements in the history of humanity. history of humanity. The basic infrastructure of the internet goes back to massive Cold War investments our government made in computer science and electronics that eventually led to the precursor of the internet, the ARPANET, and then, of course, to the economic explosion we have had since. We got Silicon Valley, which nurtured all of these iconic companies, American

companies like Apple and Google. Look, I know it's called Alphabet now, but come on, it'll always be Google in my heart. The internet age is in effect an American age, except for the fact that America has far from the best internet. America's internet infrastructure is far slower than it should be. Countries like Japan, South Korea, and Denmark have far faster broadband speeds than we do, and our internet is also way more expensive. Most rich countries in Europe or Asia have broadband that averages just 30-something bucks a month,

but in America, it averages almost 70. I mean, you don't need me to tell you that. If you live in America, you're paying for it, so you already know. And even worse, there are tens of millions of Americans who have no access to broadband whatsoever, up to 42 million of them. And those without access tend to live in rural areas or in communities of color. So what is up with this? When we are the richest country on earth, the country that actually invented the internet, why does our Internet suck so much? Well, the reason we have worse and more expensive broadband in this country is because the Internet here is controlled by a cabal of monopolistic companies.

In fact, just two telecoms, Comcast Xfinity and Charter Spectrum. I know that sounds like four, but it's actually two because of the mergers. They just have combo names now. Those two companies control half of the entire broadband market. These telecoms have actually divided up the country into little fiefdoms so they each get their regional area and they don't compete with any other providers in that area. And that gives them no incentive to lower prices or to install new infrastructure to increase speeds or provide a better product. In fact, these companies have even lobbied to stop cities and states from providing their own internet, which would result again in faster speeds, and they blocked it. And this is ridiculous because today the internet is a utility. You need it to survive in our modern society,

and not just to pay your bills or find a job on find a job dot com or whatever. No. During the pandemic, increasingly, the Internet is the only way you can do your job and the only way for your kids to get an education. The Internet is essential for participating in our society. And right now, the companies that control it are not willing to ensure that it's accessible or affordable for all Americans. It's absurd. And it's also a situation we've been in before. See, in the 1930s, nearly 90% of American farms lacked electricity. That was over 50 years after New York City began to be electrified. 90% of farms still didn't have access. Now,

the reason for that was that just like with the internet now, the companies that provided electricity said it wasn't cost effective for them to shell out the cash to create the necessary infrastructure. But like today, this lack of access to this basic utility also reinforced inequality. So what solved the situation? What brought us to the point we're in today where we see electricity as a benchmark public utility that everyone has, frankly, a right to have access to? Well, it was because the federal government finally got involved.

A landmark piece of New Deal legislation, the Rural Electrification Act, provided loans for the creation of electric power infrastructure that companies weren't willing to provide. And it worked. By 1950, 80% of farms had electricity, and the numbers kept rising from there. So the truth is, high-speed internet should be just like that. It should be exactly the same as electricity and water and heating, public utilities that are easily accessible and reasonably priced. But our federal government has yet to put in place the policies that are necessary to make that happen.

So we have to ask, when will it? Well, we're going through a presidential transition right now, so it seems like a good time to take a look at how America's Internet went wrong and what we can do to fix it in the future. To discuss, our guest today is Susan Crawford. She's a law professor at Harvard, and she's one of the leading voices on tech and internet policy in America. Her most recent book is Fiber, the Coming Tech Revolution, and Why America Might Miss It. Please welcome Susan Crawford. Susan, thank you so much for being here.

Could not be happier to be here, Adam. It's really wonderful to see you. You were on Adam Ruins Everything a couple of years ago. You're on an earlier incarnation of this podcast. Been a couple of years since we've spoken, though. What we have always spoken about is the importance of the Internet as a public utility, Internet infrastructure, all those good things. That kind of seems more important than ever right now. We're doing this over Zoom, recording each of our ends. You're in Cambridge right now?

Actually, I'm in Washington, D.C. in this moment, but you can't tell I could be in Cambridge, Massachusetts. This is what everybody's doing, right? This is how kids are taking classes right now as we speak in exactly the same way. So what is the state of our Internet infrastructure now that we are all depending on it for so much more? Is it what we need it to be? Well, this amounts to child abuse, really. COVID has revealed the shocking state of Internet access in America. We suddenly noticed that 30 percent of households in San Francisco can't have their kids learning online. These numbers are even higher in San Francisco can't have their kids learning online. These numbers are even

higher in San Antonio, 70% of households, 54% in Laredo, Texas. On tribal lands, it's truly pathetic. 80% of households can't educate their children online. This is going to have huge learning loss effects that will ripple through the lives of low-income and Black and Hispanic students across the country. We know that only about 60% of low-income K-12 students are regularly logging into online instruction, even though most instruction is online. By contrast, 90% of high-income students are going into those classes. And in schools serving mostly Black and Hispanic students, the numbers are about the same, 60 to 70% at most logging on.

Now there are lots of reasons for this. Low quality online learning, you know, it's just boring. Why would you want to be there? Yeah, even if Zoom is working properly, it's a harder way to learn. I don't think anyone would argue that's a great way to learn being stuck in,

like your entire class is happening on a little square rather than being an environment that you're inside so it's you're already starting at a disadvantage right but compared to what i mean given given the chance if online learning was high quality and and if you had a quiet room and time and if you had devices and if you had parental supervision that was available to you uh you would be doing this and we'd want kids to do it. And a necessary and not sufficient part of all this story is high speed Internet access. So it's not the whole story, but it's a big chunk of it because the numbers are so appalling. because the numbers are so appalling. So all students really need laptops and high-speed Internet access.

And by high speed, I mean 100 megabits per second should be symmetrical because everybody's download was at one point somebody else's upload. So it's really important to have symmetrical access both ways. That would allow your household to be maybe streaming Netflix, maybe being on a video chat like the one we're on now. Maybe some other member is, you know, killing time playing a video game. But you need that bandwidth in order to be a member of modern society. And we're just not there as a country. And I know in our last conversation, we talked a lot about how we got there.

And I'd be delighted to do that again. We know, especially for Black families, more than one in five does not have a high-speed internet connection at home. Wow. And often they're relying on their smartphones. They're wireless, right? But they get about a 40th, one out of 40 of the amount of data that they would be using if they had a wired connection at home that was world class and persistent, you know, on all the time and cheap. And so you can't do telemedicine or telework and certainly remote education without having this basic element in your house.

Now, we wouldn't say a house is livable if it didn't have water or electricity. Same thing today with high-speed internet access, but we are systematically underserved and overcharged as a country. Yeah. I mean, we used to think of the internet access as being a luxury. You know, like I remember, just a little personal story. You know, I was an internet kid. I got online, you know, we had AOL and everything. I was like obsessed with the internet and we had dial up.

And I remember the cable company called us on the phone. I happened to pick up the phone and they said, we're doing a pilot program of cable internet. Do you want to be one of the first homes? And I happened to pick up the phone and they said, we're doing a pilot program of cable internet. Do you want to be one of the first homes? And I happened to pick up the phone and I was like, hell yeah, we fucking do. And for some reason, I don't know why, maybe this is my parents' choice. The cable internet went directly into my room. So like I was the only person in the house. I had broadband just on my computer and I just started staying up until 2am on the internet. And by the way, that changed my life. You know, at the time, my parents were like, what's he doing? I was learning

how to make websites. I was becoming fluent with computers that led to a career in comedy because I knew how to edit video. But that was a luxury. Right. It wasn't like you needed that to live. That was like something futuristic. But now what we've done is we've taken all of these basic things that we are part of being a part of American society and now they can only be done online. You know, the number of services that are like paperless billing, everything has to be online, just as one example.

But now the biggest example is like you say, education. We're literally in a situation where you can no longer get an education right now unless you have high speed internet. And it's shocking those numbers, how many people don't now are there is the reason that they don't have it. Is it cost or is it literally the, the companies that provide it haven't run the goddamn wires to those neighborhoods or to those, because that's an issue too, right? Like literally just the infrastructure not existing, these companies not building the pipes at all.

There isn't a high-speed internet access connection anywhere near you. But overarching all of America, and the reason why this happened, is policy. It's decisions made by government that got us to this place. So when you're that kid, when you were exploring the internet using your cable connection, let's say that might have been in the early 2000s. It was about 1999. Your early adopter. That's the thing about you, Adam. That's great. And that was an early move by the cable world.

At that point, we believed that the telcos would battle it out with cable and that wireless would battle it out with both of them. And we'd have a very competitive marketplace. So prices would be low and everybody would have an incentive to serve every household in America. On that basis, and let's just assume positive intent of the Bush FCC in the early 2000s, our country removed all government oversight over high speed internet access. Absolutely no control. I mean, from the perspective of the government, it's like selling tuna fish sandwiches or a box of cereal. But we regulate selling tuna fish sandwiches and boxes of cereal. The health inspector comes around and says, hold on a second. What's in that tuna fish sandwich that doesn't smell right? And we're not even doing that much. It was what you're saying we're not doing that much no we're not doing that soon but because what happened over time in between your experience and today is that uh cable became upgraded its facilities just like that person on the phone talking to you said we want to do that cable was pretty entrepreneurial and upgraded its plants uh its wires all over metro areas in America, but phone companies backed out

of providing wireline fixed high-speed internet access by large, say sort of seeded the territory. You used to get ISDN and now that doesn't exist. You can't get it through the phone. Like they don't even offer that service. Am I right? They don't. They are still offering about,

we think about 30 million American homes have some form of what we call digital subscriber line, DSL, access over copper lines. But the phone companies decided they didn't want to dig up their copper lines and replace them with fiber. There are only three wires to keep in mind here, and it's like a fairy tale. The oldest and the one that is completely outmoded now is internet access over the copper phone line. That's DSL. It's also an element in what AT&T calls fiber to the node, that there's a neighborhood connection beyond which between the neighborhood node and your house, it's all copper, but the rest of it is fiber. So there's that. The old-fashioned landline

cable is what they'd be using right the problem is cable has two meanings in our conversation it could be the just meaning wire when i say cable i'm usually talking about the industry which is and the monsters and boy are they monsters are compcast and charter so that's the second kind of wire to keep in mind it's hybrid fiber fiber coaxial. It has much more capacity than copper. It can carry a ton more information, which is why you were so excited to get that in your bedroom. But it was architected to favor consumption over production.

So downloads pretty fast, by and large. Uploads pretty quick. This is what you're saying, that you want to have a connection that is as fast for upload and for download. But I've got cable Internet here. I pay for the fastest here. And it's got like, they call it megabit or gigabit Internet. It's rarely that fast when I do the speed test. But the upload is a tenth of what the download is. And by the way, we're in an age now where everybody is streaming video games and stuff like that from their house. Like people are broadcasting. I do that myself and it's much less

reliable for upload than for download, which is, yeah, it's very, it already feels outmoded. And yeah, it's designed, you can tell it's designed to bring stuff in, not put stuff out. Exactly right. Now that's a little technical. The really easy thing to understand is that in most areas of the country, 70%, let's say, in metro areas, your only choice is your local cable monopoly, which can charge whatever it wants for that service. So that's the second wire. That's cable. But we need to focus on the world class wire, which is fiber, which is very rare in the United States today. It has essentially unlimited capacity. You could run all of the phone calls in the world through a strand of fiber. It's just that you have to distribute it so that it hits everybody's home. home. Now, that may sound like a fairy tale in the United States. At most, we think 30% of the country has some access to fiber, usually provided by somebody who's pretty expensive. It's still an expensive service, and it really shouldn't be. We're way behind other developed countries. So

in Sweden and South Korea and Japan, it's 80 to 90 percent of access is provided by fiber. And Norway's over 80 percent. China, if you want to get the spookiness in here, China plans to connect 80 percent of its huge, huge market of Chinese people to fiber in short order. And most of the fiber being sold is going into Asian markets. So the U.S., we think, will end up with only about 11% of the world's fiber if we continue on the path we're on now. And we're becoming a third world nation when it comes to Internet access.

So we're paying way too much for second-class technology. Kind of sounds like everything in the U S I've heard that story before about healthcare, about some other things, but okay. So we've got the, the phone lines. That's the very old style. Right. We've got cable, which is what we're using, which is where we're getting overcharged by a bunch, by a very small number of companies for bad service, for service that doesn't give us the upload capacity we need for things like teleconferencing and remote learning. And then there's fiber, which just, we don't have nearly enough of it yet.

Now, I was living in New York. I had the terrible cable internet and Verizon was rolling out fiber around New York. I remember this. This was like 2009 or so. And I was so excited. I would like go on the Verizon site once every couple months and like punch in my zip code, punch in my address. And they're like, oh, we don't have fiber yet. Not, not yet, but we're installing it. It's coming soon. And then after a while, I just stopped

checking. And I found out later, I was like, whatever happened with that? I found out later, they just like stopped installing it. Like they sort of petered out. They were, Verizon had a big fiber plan. And then they were just like, nah, nevermind. And so what happened? Why do we lack the fiber? Is it literally just that these companies didn't feel like digging up the ground and installing new wires? Is that all it is? Like, it's just what wires happen to be

underground? Well, it's more that this is very expensive infrastructure to install. And a private marketplace left to its own devices being told by Wall Street what to do, Wall Street, what to do, won't want to make the long-term capital investments that are essential to provide fiber. So Verizon actually had a plan to do a lot of fiber across the United States, but dropped that in 2010. The only reason that Verizon was doing anything in New York City was because the Bloomberg administration required them to do so. And they didn't fulfill their promises to New York City. And actually, the city sued them a few years later for not wiring all the houses. And that suit has now gone into deep darkness. No one can tell what's going on because, frankly, the city of New York depends greatly on Verizon

for its public safety capacity. It gets all kinds of freebies and arrangements with Verizon. Verizon is a huge employer in New York state. So nothing is likely going to change. The other wrinkle, Adam, is that if you were in an apartment building in New York city, and you probably were, your landlord, the building often has exclusive deals with the cable provider, not to let anybody else into the building. So it's often a landlord or building problem as well. Now that's illegal. It's illegal under federal law to have any exclusive arrangement with a cable operator, but there are lots of ways to circumvent that. So the super gets a free subscription. Maybe you get an extra apartment for the super that has a free subscription or a bulk rate for the building. And in exchange for that, nobody else is let into the basement to install fiber. So I want to give Verizon a little credit here. Sometimes it's not just their

own financial incentives, which are not evil. Again, it's investors telling it not to do this. But there's also a certain amount of corruption on the multi-dwelling unit side as well. Well, so why do we have this situation with these companies where we've got a couple of massive companies that have so much power and you're often stuck with one based on where you live. Like I've got, again, I pay too much for bad cable service. I'm so happy that I live on a block that has that service. Cause otherwise I got people who are stuck with AT&T or something else in LA. Right. And they don't even have access to that service.

So why, why is that, that we, that these companies don't even have access to that service. So why is that that these companies don't compete? Because it's rational not to. Because it is so expensive to install this infrastructure. And the phone companies had a choice of business lines between high-speed Internet access and wireless. They've retreated to wireless. So really, AT&T and Verizon are mammoth wireless companies. And they have a sort of comfortable triopoly now because we allowed T-Mobile and Sprint to merge in April of this year.

So also in the wireless marketplace, which is a separate market, complementary with an E, if you can afford it, you don't rely on your cell phone for internet access to do things like take a class or visit your doctor because of those data caps and the expense of it. You'll pay huge overages if you try to duplicate on your cell phone what you're doing on your laptop. So those companies are very comfortable over in the wireless sphere. So they've seeded cities to cable. And in rural areas, a lot of people have no form of access or terrible DSL. Now, the cable companies are looking to grow just slightly.

They're happy with their footprints as it is, and they never compete. So in New York, it was always Charter. prints as it is, and they never compete. So in New York, it was always Charter. And Charter is now a mammoth $128 billion cap company, market cap. Comcast is over $200 billion market cap. Verizon's even bigger. So these are ginormous companies. But Charter doesn't have to face competition from Comcast in New York City because they divided up the country. So Comcast has Philadelphia, its home city, a lot of other cities around the country that it controls absolutely, and Charter has it. But again, it's not evil. It's not malign. These are not bad companies. It's just that they are subject to no supervision. No, there's no requirement that everybody in the country

have a world-class persistent cheap form of internet access. So it's a, it's a failure of government, not a failure on the part of these great American companies. Well, it's interesting. I wonder, uh, it brings to mind the phrase, the banality of evil. Well, now that's a Holocaust comparison. Cause I'm bringing up like Eichmann in Jerusalem and Hannah Arendt. But, you know, it is like if the if the consequences are evil, right, we could have that debate. But like I have to ask, dividing up the dividing up the country. I understand your point about the logic of capitalism. It's simply the logic of capitalism. This is what happens. This is not anybody trying to nobody's scheming and rubbing their palms together. This is just like, hey, we make more money this way. And that's what we're supposed to do. We're a company.

And that's why we need the government, you know, as the incarnation of us as people, you know, to make decisions about how we want our society run that are not solely based on the logic of capitalism. not solely based on the logic of capitalism. But I just have to ask this thing of dividing up the country. I'm not an expert in antitrust law, but it sounds to me that if you're saying, hey, we're not going to compete. Instead, we're going to divide up the marketplace. You stay on your side.

I'll stay on my side. Hey, nudge, nudge, wink, wink. You know, you take Minneapolis. I'll take St. Paul, right? That sounds nefarious to me. That sounds like that should be illegal. That sounds anti-competitive. Is there any law against this? Never assume malice with it. The answer is often incompetence.

Our government actually participated in helping the early 2000s cable industry do this. Why? Because we believed that these wires would be battling with each other. We wanted to help the insurgent, which at that point was cable, to do better. And this is a business that runs entirely on economies of scale. So if you could have all of your billing operations operating in a single footprint, it's just more efficient. And actually, by its nature, telecommunications infrastructure is what people call a natural monopoly.

It really doesn't make sense to run more than one wire to a home. You know, we don't have more than one source of water. We don't have more than one source of electricity. What does make sense, and the only way that other countries have managed to create competition, is to have a really great world-class fiber last mile connection into every home and business that is wholesale and subject to government oversight for its rates, and then is leased out to a whole bunch of retail operators. So then they provide really cheap service. So that's why when you flip open your laptop in South Korea or Sweden, you will get a gazillion competitors. The market price for access really should be in the United States about $35 a household. Wow.

It really should be. That's what we paid for telephone. There is no reason why we should be paying so much for access. It's like $70, $80. At the least. I mean, some people pay $200 and they get into these bundles that are inextricably sort of shiny. Yeah. If you care about sports, for example, you're sunk. Yeah. I mean, some people pay $200 and they get into these bundles that are inextricably sort of shiny.

If you care about sports, for example, you're sunk because you've subscribed to all that. Look, I paid for the whole package, but I have a landline phone part of the package that I don't use and I'm constantly like, can I get rid of this? They don't want you to. So it's it's because we the government thought that cable would be competing with the phone company and with fiber that they said, OK, you can divide up the country. But now we're in a situation where cable is the only game in town. And so because it's the country's divided up now, you basically have a local monopoly no matter where you are. Right. And if you're looking for a covid winner, a bright spot, it really is the cable industry. So during just the second quarter of 2020, cable added 1.4 million subscribers because everybody needs this. Right. And at the same time, people are fleeing DSL where they can because it's so second rate. they can because it's so second rate. And the people who can afford it are, you know, maybe they're giving up on paying for rent or food, but they are moving to cable subscriptions. We're seeing a lot of people switch from mobile only to cable. So that's 1.4 million subscribers,

2.4 million subs added in the first six months of 2020. And get this, Charter alone added 850,000 new subscribers in the second quarter of 2020. That's compared to 258,000 in 2019. And a lot of those, about 230,000 of them, are customers. And here's something really interesting, that the government has asked Charter to provide subsidized service for or deals so that they will be able to be online during the pandemic. But you know what that is? That'll be a short term thing for the government. Yeah. And it adds up to a customer acquisition program for Charter because they will have identified the people who can't lose this affordance and will continue to subscribe. So really, really, a market cap of $130 billion and just adding to its footprint, marching on a juggernaut, really. And now Charter is thinking of expanding slightly into

rural areas. And they expect to get about 80% of any footprint they expand into rural areas. So then, and they expect to get about 80% of any footprint they expand into rural areas. Why? Because there's no other choice for anything approaching a world-class connection. Well, man. And as a result, this is why we're not upgrading to fiber and things like that because they don't have to. Well, they already have. They're already getting $80 a month, $90 a month from you for their substandard connection. You have nowhere else to go. Why would they go dig up? I mean, I mean, look, all the phone companies, like you say, they're in a comfortable, you know, sort of oligopoly situation, but at least they're competing on 5G. At least they're saying or at least they're giving the appearance of it. You're saying, or at least they're giving the appearance of it. You just shook your head.

But they're giving the appearance of it. They're saying, we got the best 5G. No, we got the best 5G, right? So people can switch from one mobile provider to another, but you don't even have that option with your cable internet. So they have no incentive to improve. And just a moment on 5G. Yeah, let's get into it. Well, only because it is actually the fiber story as well.

95% or more of a 5G connection is fiber. Only that fiber, that pure glass with light traveling through it instead of electronic pulses, has the capacity to carry the tsunami of wireless data outputs that will be provided by a 5G device. So Verizon actually is installing fiber only in metro areas. This is the only place where this is happening so that they can sell that 5G service. But their whole plan is for 5G to be much more expensive than 4G. For it to be initially a very luxurious service, they're looking to find that market that's willing to pay for it. And so I don't think it's part of this story, really, the internet access story, except for a few leafy or very wealthy downtown business districts. The poles have to be really close together because the 5G has very, very fast spectrum, but it doesn't go through walls. It needs to be very close to a

wire. But the only thing I want you to keep in mind is that having that wireless connection depends absolutely on having fiber deep into American neighborhoods. And that's why it won't happen in rural areas. And but that means that Verizon, which which bailed on sending fiber to my house, now they're connecting it to their cell phone towers is what you're saying. So they're going to hook it up for them, but not for me. I'm not going to get it in my home. Right. And not for any other cell phone provider.

So actually, the wires underneath the cities of America are usually controlled by one player. It's either Verizon or AT&T. They've also divided up the country. So those won't be interoperable cell towers that have both Verizon and AT&T and T-Mobile sending down 5G. They'll be only for Verizon. So yet another opportunity to extract a lot of profit.

So getting back to your sort of premise, how did this happen? Because of government inaction yeah we now see how it's played out but here's a fundamental issue with all of this there's a big kickback going on between cable providers and the government something about three billion dollars a year goes back into the coffers of cities and states because there's a franchise fee that's associated for cable operators with their provision of sports and television. And that gets given to states.

So they're paid off for not changing the status quo. And those wires are put to good use, you know, and the money is put to good use. And that those wires are put to good use, you know, and the money is put to good use. Cities often strapped for cash, use that money to make sure that their police stations and, you know, municipal buildings have adequate connections. it, that's a strategy to sort of entrench their monopoly. I've seen, I remember seeing Verizon ads that were like, we help the first responders and we've given them special phones or just like that kind of thing. And so they're kind of what sort of in strict, in strict, in strict, in strictly, is that the word I'm looking for? Inextricably intertwined, inextricably intertwined and say, hey, we're going to become a 21st century super, super information, super highway city with super fast Internet that everybody gets at an affordable price. That sounds like a great way for a city to rejuvenate itself or to build a new tech industry.

And it's if they want to. And but I've heard about them being prevented from doing this by the big monopoly players. Can you tell me about that? Well, the big monopoly players speaking through state legislatures. So in about 20 states in this country, it's either illegal or extremely difficult for a city or a rural cooperative to get involved in high speed Internet access. And, you know, over a thousand cities and areas have attempted to do this. So it's not novel. It's happening all over the place. But they're often struggling against the enormous economies of scale that are enjoyed by the incumbent players. So they can just always – it's called predatory pricing.

They can always destroy a municipal effort, either through the state legislature saying you can't do it, or for a moment, underpricing their service, so that nobody will switch to the municipal offering. So there's a very clear story of this in a town called Wilson, North Carolina, that decided they weren't being well served enough by Time Warner at the time, and they already were providing water as a city. So they said, well, let's, and electricity. So let's just be the telco providers, build a fiber network. For a while, Charter or Spectrum or Time Warner, as they were at that point, had a special Wilson price. They would charge people in Wilson much less for cable internet

access than they were charging people in the rest of North Carolina, just to make sure the municipal offering didn't get off the ground. And Wilson went through lawsuits and incredible efforts to get this network going, but they, you know, they're extremely smart and they just kept building ahead. Today in Wilson, if you're in public housing, you can get access to the internet for $10 a month because it's important to the city. It's a public value they care about. And for everybody else, very reasonable cost. In the rest of North Carolina, it's illegal. Why? Because after the Wilson network succeeded, the Time Warner lobbyist went to the relevant committee in the state capitol, opened up his briefcase, took out 23 copies of a bill and had them pass it.

So you can't do this in the rest of North Carolina, which is one of our most interesting states for education and many other public policies. But Adam, the exact same thing happened with electricity. We used to view it as a luxury and only people in big cities had it and they were paying a lot and usually to a monopoly private provider. In the 30s, 90% of people in farms didn't have electricity. Most black people didn't have it in America

because it just wasn't provided. It took leadership and presidential leadership in the form of FDR, who took on the private electricity cabals in this country and subjected them to public oversight. He said it was the hardest political battle of his life because the private companies went after him. But often in order to shame the federal government into action, it takes local steps. And that's what we're seeing. So we're at that part of the story for internet access in America right now. For what it's worth, my favorite model is not that the city itself provide internet access, but that it make the basic infrastructure, so fiber unlit by lasers or even empty conduits available to a host of players.

Yeah. So anybody who can open to anybody so that we get lots and lots of competition. And West Des Moines just did this. They just put in empty conduit and made a deal with initially Google Fiber, but it can be any fiber provider, that they could use that conduit. They just use that. And that sort of soaks up a lot of the expense of initially putting in a fiber depth. Yeah. And then it will lead to a lot of competition.

I don't want cities themselves to provide it because that leads to surveillance, sort of involvement in communications. But this is just a public work. It's like a bridge or a road. It's like water. Yeah. And we we don't seem to argue about those things being subject to oversight or city control. But we did. We once did. We once did, especially when it comes to electricity. I remember reading about rural electrification that, yeah, it was a, it was, it was a very similar pattern where the companies were saying, well, we can't run all those cables out to where there's one little farm. Like that's not going to make enough money for us. And then slowly we started to realize, wait, this is, this is really to live.

You know, you had people in the, in rural areas who didn't have appliances who didn't have communication, who didn't have, you know, people were dying. People were, you know, the difference between, you know, not having electrical, heat, electric, you know, et cetera, and having it was so massive. This is just a matter of like human,

humanitarianism. We need to get these people and then we force the companies to do it and guess what? They did it. Now they make, you know, money off of it or we have local, you know, local utilities. But we now see this thing that was once a luxury as almost a human right in America. That if you if you tell someone, oh, yeah, I know those people over there, they don't have electricity.

People are like, oh, my God, we need to help them. Right. And around the world, I've encountered that attitude for people in places like Singapore and Sweden and South Korea. They will look at me and say, Susan, how can we help your country? This is so awful. Why do you have this lousy situation when it comes to high speed internet access and you laugh out of recognition and despair? It's not actually funny. It is a global competitiveness problem for the United States. It's a global national security problem for us as well. We are creating increasing inequality, which is leading to increasing anger and despair in our populace, which leads to violence.

So we're just in a bad way. And all of these things are of a piece, our inability to, you know, control the virus, our inability to have people lead respectable lives, and our inability to educate them properly. Well, that's very stark. Let's, right after the break, talk about some solutions to this and the barriers to those solutions. We'll be right back with more Susan Crawford. Okay, we're back with Susan Crawford. Let's talk about what we need to do. Let's talk a little bit more about the FCC. We haven't talked that much about them generally. The FCC since, you know, you referenced the Bush FCC. We've been

through a couple FCCs since then. That's, to me, as someone who doesn't know that much, I'm like, yeah, the FCC needs to, you know, put on their big kid pants and, you know, do some classic, you know, regulation of the market and help compel these companies to give us what we need to have. Why aren't they doing that? What are the impediments to that happening? Well, under the current FCC chair, Ajit Pai draws a very big circle around what he considers to be internet access. And it includes for him wireless access, even though it's very expensive and low capacity and DSL. So if you add all those things together in a great big market, you could say, well, nearly 90% of Americans have access to the internet. Now, some of them can't afford to pay for it, but there is access.

Some of them are getting horrible service, but there is access. So on that basis, he's saying, we've got, things are fine, basically. We've got a few areas of the United States, mostly rural, huge focus on rural, that could use better access. And so we will subsidize these giant players And so we will subsidize these giant players to expand into rural areas and there duplicate the monopolies they have in metro areas. So that's basically been their approach that, look, the market's doing fine. We're fine. Let's just put the burden on the state, frankly, to pay for expanding access into rural areas. I find this to be an almost racist attitude. It's only rural that has the problem because there's so many low-income and Black and Hispanic people in our metro areas

who don't have cheap, persistent, world-class access. And there is an adequate focus on that issue. And I've also heard them say that they believe that, hey, the cable company is competing with cell phones. Oh, we have competition because Verizon, you know, your Verizon 5G is going to compete with your cable. And, yeah, that seems facile. I can't do my Zoom teleconferencing over my phone. Or at least when I do, it works much worse. I can't stream my – I can't make a career as a Twitch influencer over my cell phone connection, right?

Right. And I can tell you from Wall Street's perspective, these are two separate markets. Yeah. Again, but when I'm talking about wireless, I'm really talking about 4G, not substitutable for this all fiber connection or even substitutable for cable because of the data charges, overages, every other limitation of a wireless communications facility. And we know this to be true. And economists use that word substitutable because if you can afford it, you have both a cell phone and a wired connection at home. Maybe you're using it through Wi-Fi. Right.

But you have both. You have both. Where people are really poor, they tend to rely about 15% of the country on just their cell phones. Of course. And they think that's good enough. But they're missing out on an awful lot of modern life that way. Yeah. That's the risk. But if you draw that line around the marketplace broadly enough, you could say, oh, everybody's out there competing.

Actually, that's not true. They're not substitutable. And the crazy thing about 5G is at this point, it's mostly dreams about a possible head-to-head competition. Hasn't happened yet. But the current FCC can point to it and say, oh, well, that's just about to happen. So let's not get into the business of regulating. And the really fundamental thing that has happened between the Obama FCC and the Trump FCC is that at least the Obama FCC took the step of pasting a label on the foreheads of these giant companies saying, when you're providing high-speed Internet access, you are a utility.

It's called Title II regulation. And we've been fighting over this forever. They did it only in order to get net neutrality through. But the label was important. And if they'd been braver, they could have carried out price regulation and required competition and sharing of facilities, other things we talked about. They didn't do that. They didn't do that. And then as soon as Mr. Pai came in, he rolled that back.

This is just like energy and all the other health and all the other things we're seeing getting rolled back. That was a very dramatic reversal in the telecom land that happened right at the beginning. That was a very dramatic reversal in the telecom land that happened right at the beginning. So that means no real federal oversight all over again of high speed Internet access. It was that they had formally classified the Obama FCC, formally classified Internet providers as utilities, which means the FCC has a different whole set of powers to regulate them. Potential powers. Yeah. And then the new FCC comes in and says, actually, they're not utilities anymore. They're something else.

They're tuna sandwiches. They're tuna sandwiches. And so, oh, we don't have any power over them and they can do what they like. Yeah. Is this, I mean, so would you say they need to be reclassified again as utilities?

Could that happen? I mean, that's whiplash to go back and forth like that. Well, it was the right thing to do, because absent that, it means that the federal government has no say in how this essential facility is provided to Americans. And that's like saying we have no oversight over banking. Let them go. over banking. Let them go. Same thing. We depend on a commodity banking function. And that also happened under FDR that is insured, is available, so we don't have runs on banks and panics. Same thing here. We should depend. There should be federal power over this very basic input into all of American life. So we will have to relabel it. And Mr. Biden's FCC would likely do that. So we will have to relabel it. And Mr. Biden's FCC would likely do that. It would probably take another 18 months. I have to say, though, that I don't see any appetite in the people who are around Biden to do anything more than that in terms of requiring low prices.

Never going to happen under those guys. guys. Biden's kickoff party was hosted by the consigliere of Comcast, who is David Cohen, who is a very important political player in a lot of ways. And he will likely have a big role in the Biden administration or people from Comcast will have a big role. But both Ms. Harris, Senator Harris and Mr. Biden have deep, deep links to the content and communications industries. Now, that's what we see in so many in so many industries, so many things that need to be regulated. But I also remember that in the Obama years, you know, Tom Wheeler, I made a video for College Humor about net neutrality and about how, you know, the revolving door between the FCC and the industry and how, you know, Tom Wheeler was a former, I forget executive for what, but, and then,

and then they, they made a turnaround, you know, they, to me, it looked as though they responded to public pressure and they got a little tougher. Well, not quite actually. And I backed Tom Wheeler for that role because I knew he had a backbone. When he believes it's the thing he needs to do, he will do it. And he understood that he couldn't act on net neutrality, which was a big priority for the Obama administration. He couldn't do anything about it without this classification, this label on the forehead saying that these guys are utilities. So that's why he took that legal step. You could say that was public pressure. You also had a video from the president who acted as a sort of law professor in chief

at that moment saying, without Title II, no net neutrality. I get that. It needs to happen. Yeah. So the FCC is an independent agency making its own decisions. But the president weighed in publicly along with the rest of the public on the need for netted travel.

I also think my video was very convincing. You know, we both, me and the president both made videos at that time. And I'm pretty sure Tom saw both of them. And no, I... You win, you win. But, you know, there was that moment where, you know, John Oliver did that, did that segment. And then you had, uh, Tom Wheeler saying, I am not a dingo. Remember that?

That's pretty good. Tom has a great sense of humor. He could really roll with the punches, but you have to understand that net neutrality is a pale imitative shadow of actual treatment as a utility, which could, you know, require that if you are in the business of providing that last mile to homes has to be fiber has to be provided on a non-discriminatory wholesale basis. And so that other retail operators can provide services over it too. And we're going to tell you what price you can charge for that wholesale rental, because if that price is too high, then you'll only get a few competitors. Does that make sense?

Yeah. So you could do that as a regulator. If we really cared about this issue, we could take those steps. Biden people know that would lead to a lot of litigation and it would also have no upside politically because these companies are enormous contributors to campaign finance. So they will just pay for people to unelect them. And our basic problem is the marriage of short-term political people plus lots of money in the system and no control over campaign finance. And so very rare, You've got to have someone like a Dr. Fauci for fiber who sees the long term impacts of not doing the right thing. And it's brave enough and fearless enough to just say it over and over again and has power.

Yeah. And we haven't allowed any of that to happen in the telecom area. I wish you had power because you because you communicate about it very well. Give someone give Susan some power. No, look, this is the problem with so many industries, right? But let's talk about, because you understand the history of this too, like what will it take to get us there? We talked about rural electrification, right? That was the New Deal. That was coming out of the, you know, the Gilded Age and the Industrial Revolution and these times of like massive corporate power, right? Your standard oils and your like that were, you know, had as much power as these companies do now, or I don't know, I'm not a historian of

these things, but these were massive companies, right? And then we had a sea change where, you know, the country decided to regulate electricity, right, and to make electricity a true public utility. And that created the world that we had today. And it took decades to do it. What how do you think we get there from here? Right. Like if you if you've studied that history as well. Well, history doesn't repeat itself, but it does rhyme. And we have the same kind of Gilded Age today. Public awareness of it is somewhat lower. COVID has

helped because it shows the public health crisis in this country to be so dire. Yeah. We cannot look at ourselves as a leading nation anymore. We're in crisis. So many Americans have lost their jobs. So many are at risk of dying. We have to do something. Wall Street continues to do well, but middle class and poor Americans have little participation in those profits as inequality continues to grow. So the top 1% of Americans controls 40% of the wealth in the country. Wow. So we've got the same conditions. The problem is that we're, as a country, pretty complacent.

We don't seem to riot about many things. Sometimes we do, and I hope it doesn't ever become violent. But the awareness of just how bad the situation in America when it comes to telecom is not broad. COVID is making it broader, making it broader. But people, because we don't travel as a nation, we're not aware of just how out of step we are with other developed countries. And we're not aware of what it would mean to never have to think about Internet access. That should be it should be like turning on a light switch. Yeah. You know, we don't think about electricity anymore. Men fell to their knees when they first saw electricity in the late 19th century.

It was a miracle. We still feel that way about available Wi-Fi. Like, oh, my God, it's here. shift in America to just assuming that you don't have a viable, thriving life without a cheap 35 bucks a month, persistent, never latency, no problem. You never have to think about it. We do what we want when we need to. And when we're ready to make that mind shift and create the crisis, change happens. But it does take political pressure, but it mostly takes electing people who understand this and are willing to act and don't fear being destroyed by the money flowing in the opposite direction. Yeah. But how, like creating that political culture seems so difficult. I, I need

to become a better student of the new deal because it, it because it really is, you know, we elected a rich man, a wealthy man who was somehow able to, you know, pressure these companies and was able to do that fearlessly, but also created an entire political culture around this. And, you know, the cable companies now, I have to imagine the electric companies were, were, you know, enormously powerful players at that time where you're not, you're not talking just money. You're talking, they are part of the political power structure because they are, you know, paying off everybody at every level of city and state government. And, uh, you know, they're, they're providing this utility that everyone's depending on. So, like, you don't want to fuck with, you know, Spectrum. You don't want to fuck with Con Ed. Right. Yeah. So, yeah, it's like I've got a book recommendation for you and your listeners. Oh, please. Fear Itself is a fantastic book about the New Deal by Ira Katznelson.

Really fantastic. And the New Deal isn't perfect. Yeah. We also did it according to the racial caste system of the time. So there are all kinds of compromises made in order to serve Southern Democrats that turn out to last over decades. We're still fighting them. But the basic idea that Congress could act to serve the public interest, that government actually could serve the public interest, was established at that point for Republicans and Democrats alike. There was a grand consensus. Now, you know, Morgan said that it was not just a, that the New Deal was not just a sort of a government program to subsidize, but also an attack on the entire social order. And starting in the 30s, we saw a big businessman's revolt that ends up with Mr.

Reagan getting elected in 1980. And it was helped along with the Democrats. You know, Carter did a lot of awful things to serve business as well. And actually, so did Kennedy. Kennedy's big move was going to be a big tax cut. We don't remember him for this, but that was what he initiated. It was his first big legislative initiative. So long story short, Americans are capable of great things. We've shown it over and over again. We should learn from the New Deal how to do it better next time. But we need to have people trust that government is actually in their interest. And that takes a lot of doing after all these decades of steady dismantling of the idea that government serves any purpose in American lives. Yeah. Well, so much of the time, there's so many areas in which it doesn't.

Right. In which it in which it's not serving the purpose we want it to or in which it's hurting Americans. And it's not just rebuilding the trust. It's rebuilding the actual mechanisms so that they are serving us. And then we can start trusting them. You know, it's so true. It's a vicious cycle because of the businessmen's revolt. We've systematically under resourced government. So thinly resourced, scarce government does a bad job. And so then we think it does a bad job. And so the CDC is actually an example of what had been a well-funded nonpolitical organization leading the world. But when you start to make it political and hollow it out and fire people, bad stuff happens. So you're seeing a sort of CDC-ation of many government functions.

So we have to reverse that as well. Yeah, we need to tell these stories of how government action actually created the world that we live in today. Like the reason we have electricity like water is because of this muscular regulation that gave us, it wasn't private business that gave us that. Private business was part of the story, but there's this other big part that we did well together and that gave us the world we have today. And we can do that again, right? We can, we can exert ourselves in that way again. We need to tell that story so that we remember that and have the willingness to do it. But it feels like we're so far away sometimes because yeah, first we just need to spread the word that's pot. First you need to tell everybody, Hey everyone, if the FCC

worked differently, you could have really good internet everywhere you went extremely cheaply and kids could telelearn. You need to convince the entire country of that. And then you need to get politicians to run on it. Then you need to vote for them. And then you need to have an extremely costly, difficult political battle with the powers that be in order to create that. It seems like a long road. It's a little bit upsetting how long it is. I don't know. Well, you know, it took 70 years for women to get the right to vote in America.

Yeah. Similarly, long fought battle. It may take, I hope not, but it may take decades for us to just understand how we're sinking. Yeah. What I'm hopeful for is that this national security angle really awakens the Department of Defense and others who just begin to understand how we're undermining our ability to act coherently and to be a trustworthy citizenry at a time of enormous inequality, that we're actually creating instability in our own country. So I'm hopeful that that angle will be another bright light to shed on this. You can't

keep your population healthy, educated, and employed without this basic facility in place. It's not sufficient, but it is necessary. And Americans are by nature cheerful and resilient and friendly. They just are. Outside in the streets, Americans are not screaming at each other by and large. And so my hope is that we can gradually turn our country when it comes to these basic issues. and it takes a crisis, but we've got one right now. You know, the economy has vanished. Lots of people are getting, more people are going to lose their homes. Yeah. And that's what happened at the beginning of the depression.

You know, people hungry, unclothed, without housing and the banking system failing. And we changed our ways. Yeah. Well, Susan, I can't thank you enough for being here to tell us about it. You make me feel despairing, but then you do give me hope at the end.

So I really, really appreciate it. And you break this stuff down so brilliantly. I can't thank you enough. Well, thank you once again to Susan Crawford for coming on the show. I hope you enjoyed that interview as much as I enjoyed having it. If you did, please leave us a rating wherever you subscribe. And hey, by the way, got to tell you something.

We are going to be doing subscriber-only episodes of this show on Stitcher Premium. If you are a Stitcher Premium member, you will be able to hear them and no one else will be able to. And for those episodes, I am going to be taking your questions with some special guests. How cool is that? So if you want your question to be answered by me live on the show, send it to factually at adamconover.net. You can even send an audio recording of yourself asking the question if you want, or just type it up into an email and send it to factually at adamconover.net. That is it for us this week on Factually. I want to thank our producers Kimmy Lucas and Sam Roudman, our engineer Andrew Carson, Andrew WK for our theme song. I also want to thank the folks at Falcon Northwest for building me the

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