internationally in the very heart of moscow. for tonight's conversations of great minds i'm joined by susan crawford she is the stanton professor of the first amendment at harvard's kennedy school and a columnist for bloomberg view and wired dot com she's also a member of mayor michael bloomberg new york city council on technology and innovation in two thousand and five to two thousand and eight she was a board member of the internet corporation for assigned names and numbers and as i can and previously she served as a special assistant to president barack obama for science technology and innovation policy and was the co-leader of the f.c.c. transition team between the bush and obama administrations the policy expert in the field of telecommunications in the internet and her new book is titled captive audience the telecom industry industry and monopoly power in the new gilded age i'm

honored to welcome susan crawford from the new york studios susan welcome. thanks for having me thanks for joining us the united states used to lead the world in telecom we you know alexander graham bell i think he was an american but research really you know when i had the first major telephone system you know our first of the telegraph system was here the the internet we invented the arpanet darpa with all the stuff where we stand relative to other developed nations today. well i just went to visit seoul south korea and vacation and people here people in seoul told me that coming to the united states is like taking a rural break because internet kind of activity here is so slow and so expensive it really feels to them like a third world country. so you know relative to what you know my understanding is actually in south korea every home that the government made a mandate that every home must have cuomo to one line going into it is that is that . accurate they're in seoul where half the population of south korea lives when you

move into a new apartment you have a choice of three symmetric fiber providers one hundred megabit per second service and it costs thirty bucks a month for both internet access and t.v. channels that's just unthinkable in the united states so how did we. how did they get there and how did we get here. well it's a very interesting story we were we had the leading telephone system in the world and we thought that when internet access showed up in the mid ninety's in the early two thousand that competition would protect americans when it came to using telephone lines to get online and the competition was going to come from the cable networks so telephone d.s.l. service and cable modem service roughly the same price in about two thousand to roughly the same speeds and on the basis of the belief that that competition in the sort of magic of free market would both protect americans and make sure that

everybody got high speed internet access we listed all oversight all prior legal regimes we're just removed from this and we turned out to be wrong it turns out that we're consolidation is possible competition is impossible and the cable guys pulled way ahead so ninety nine percent of new high speed internet access it's corruptions went to the local cable monopoly in america in the last quarter of two thousand and twelve and that cable connection is a second class connection it doesn't provide the upload speeds for publishing that fiber does in south korea also not every american has a one hundred million americans don't subscribe to wired internet access often because it's too expensive so we have the worst of both worlds we have no real competition no oversight and we also seem to have no plan for fixing this so.

the the the i'm reluctant to put a label on this but a. conservative or libertarian ideology is that if you completely deregulate the market of government stays out of it altogether that you will have perfect competition and that that will remove all barriers to entry but it seems that x. perience that you're describing is that when you deregulate the market you end up with a monopoly and that creates barriers to entry that doesn't isn't a good thing for the consumer in my saying they're right yeah that's right and we've seen this in major infrastructure industries before same thing happened with railroads you know very expensive to build providing a basic service for the entire country in the mid nineteenth century and there where government oversight was absent they absolutely consolidated and carved up markets and left some people out same thing happened with standard oil you mention last hour john d. rockefeller controlling ninety percent of oil production and actually in league

with the railroad barons choosing the markets that would succeed in the ones that would fail and as a country we decided in the early twentieth century that government acts as a steward for the common good and when it comes to the commodity inputs for every part of american business and society there is a role for oversight for a price controls for ensuring that every american is served every american is protected and we have world class service so you're talking about the sherman antitrust act in the eighteen eighties teddy roosevelt's trust busting. pick that up and carried it forward is that this and but in one thousand i think was eighty two in the early in the reagan administration. essentially stopped in force in the sherman act eight hundred eighty had been broken up and his is directed to the justice department led to this explosion of acquisitions or was the m.n.a. frenzy of the early eighty's and michael milken and all these guys rose up and they became the you know the masses. there's a universe and

a masters mergers and acquisitions masters. and we don't really we haven't significantly reinforced the sherman act since then in my in my telling history was some accuracy here and if so what do we do about this. you've told the right story it's not just a trusts activity though that that's relevant here because it might be that the local cable monopolies would never compete with each other i mean they didn't divide up the country back in the mid ninety's you take sacramento all take san francisco you take minneapolis so comcast controls the market in boston and philadelphia and chicago time warner has its own territories it might have been that those guys never would have competed so competition policy would not have protected americans but that's where oversight regulatory policy plays a role and it all the other developed nations of the world there's real concern about how much people pay for this very basic input into everything we do and the

conditions under which it's provided in america we've just given up on that when it comes to high speed internet access. when the reason i lived in vermont a decade or so ago a little bit more than a decade ago we have. the local all the phone lines were owned by i believe it was verizon it was one of those big companies and but the state of vermont it passed a law saying the as part of the common carrier and it was if you're going to run your lines through our commons on our streets you have to allow any company to have access to that copper and so we got our telephone service from little company called solver net and they charge twenty five dollars a month for a helpful telephone access and when we called for assistance for help literally the guy lived in the next block over and walk over to the house you know there is little time seven thousand people up here for a month. in the second year that we lived in vermont there was. into the monster to

say it was an inappropriate role of government to force the rise and to allow sovereign debt to compete with them over their own copper and i don't know the status of it nollywood was being fought when we moved but is that the kind of thing that you're talking about absolutely when it comes to these natural monopoly infrastructure businesses it makes sense to have wholesale facilities that are then shared by lots of retail providers and that that's what protects consumers so again back to seoul the mayor in seoul decided that it made sense to have a wholesale fiber ring going through the subways in that city and that's the reason for souls great success there are lots and lots of retail providers that use that basic infrastructure which is available to them at a standard cost and then they differentiate themselves they provide you know different kinds of services at different price points that protects consumers and we've done this in america for one hundred years for seeing sharing of

infrastructure so that retail competition exists but we gave up on that notion in the last ten years when it comes to high speed internet access and by the way it's very likely that your town in vermont that verizon actually has sold those lines now because it's gotten rid a lot of its lower performing wireline assets and moved away almost entirely from copper into wireless yeah of rise really is a variety of wireless company now more than two thirds of their revenues come from the wireless is the new is the new telephone monopoly as. well there are two separate markets here one is wired high speed internet access and that's the cable guys they have one that work at they're taking all the new ads and they're making ninety five percent profit margins on their high speed internet product i mean it's amazing really it's torrents of cash on the other side is in wireless and eighty.

t. who are very dominant on the wireless side and they're they've got about two thirds of the subscribers probably most of the cash flow and they're also if they have a strong enough market position based on lots of barriers to entry including their spectrum licenses from the federal government that they can do anything they want they can raise prices drive everybody into these shared use plans have very low data caps so that it becomes very expensive to use your wireless device for anything more than mobility just keeping track of email so lots and lots of power over their enormous cash flow for them being spun back to their shareholders a very high dividend very high buybacks the shareholders of horizon wireless and eighteen t are doing great same with the shareholders for comcast and time warner the problem is that the country is sinking when it comes to this absolutely essential data access that we're going to use for everything for climate change research for

access to medicine for information entertainment there really is just one pipe now and it's data and we've let just a very few companies control our country's future would be stretching a metaphor to suggest you know better franklin said we should all have access to information so let's have public libraries and the public library of this era is the internet itself and therefore it should be considered a public utility like public libraries were in the late eighteenth century right up to today. that's a useful way to think of it i often people's eyes light up when you talk about electricity that we used to think of electricity as a luxury and in the early one nine hundred ninety percent of farmers didn't have it kids in new york city were playing with electric toys controlled by private utilities that were consolidating and not subject to any oversight that was a huge problem for the. and it took

a decade several decades actually to move electricity from the status of being a luxury into being a very heavily regulated utility same thing happened with the telephone and now needs to happen with high speed internet access where you're talking about really i'm sort of sorry it's not just information i don't want to make this abstract that coming into every home and business is our window to the world it's health care education absolutely everything that we do this is this is this is core stuff this is this is essential stuff for citizenship and for quality of life this is i'd like to get into the the part of the title of your book is the gilded age i'd like to get into that right after this break we'll be right back more of our conversations with great minds with susan crawford.

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international lamp in the very heart of moscow.

welcome back to conversations in the great minds i'm speaking with telecommunications expert susan crawford the author of the new book captive audience the telecom industry and monopoly power in the new gilded age. susan i mentioned the gilded age part of your book as we were as we were a bucket out into the into the break and the the gilded age the period of the the last more or less three decades of the nineteenth century was at that time referred to as the long depression it was a period of just turbot working condition terrible conditions for average working people while there was this enormous consolidation of wealth and and power at the top are you drawing that parallel today. yeah this information inequality is just exacerbating in the end that's excel orating actually widening inequality in america as well so it's absolutely a problem for the country that one hundred million americans don't have

a wired internet access connection and that that's very highly correlated with whether you're rich or poor so the rich are getting couched. all are very often left out so in my city of new york two point two million people don't have a wired connection at home this leads to incredible inequality when it comes to education health care the ability to apply for a job or the ability to start a business the wall street journal just did a big article about kids doing their homework at mcdonald's because there is free why fi their restaurant or people relying on public libraries which are getting pummeled with the need for internet access so we're creating to americans you know people who have this very expensive access as specially when it comes to a very high bandwidth flow latency access that you could use to do a live video conference and people who don't and it's just getting worse and it's

we're getting worse quickly as the months go by so something needs to be done we're recapitulating the gilded age with even greater disparity than existed then. you you mentioned electronics or electricity and and so often you telephones and my recollection is that the rural electrification administration in as i recall the the roosevelt franklin roosevelt administration and the roll to law from the administration was called i think was that during truman or eisenhower did was that also f.d.r. did that i mean both cases basically the government came in and said private corporations you are not willing to run these long lines out into people's farms because it's not profitable so either we're going to run the more we're going to force you to run them and pay for them and i don't recall which it was can you tell us those stories and is that the model that you're suggesting for for broadband at the same thing happened in electricity so roosevelt had to f.d.r.

had a great history in warm springs georgia and knew that not having electricity there was causing it that the quality of life to be a lot lower and so he made sure the. cooperatives across the cultural regions of the united states were supported subsidized benefited and forced equal level of electrification across the country that's what needs to happen now with high speed internet access is exactly the same story and back then municipalities when they wanted to do this for themselves or cooperatives when they wanted to provide electricity were attacked as communist bolshevik efforts by the private actors that wanted to stop them exactly the same thing is happening in america today where. they are trying to bring high speed internet access to their own citizens are being stopped by incumbent driven state laws making it either illegal or very difficult for municipalities to do this for themselves so we're just

redoing the same history except we're doing it at a time when the rest of the world is far ahead of us and getting farther right whereas before we were doing it we were leading the world right exactly that is a key difference here and that's that's pretty scary when you consider the consequences of this. be you mention libraries being overburdened and i mentioned franklin ben franklin he had started this kind of intellectual men's club the juno society in philadelphia and they had a huge library and his idea for public libraries was give those to the poor give access to the poor and those the public library came about in philadelphia remembering my money my ben franklin history right. are you suggesting in the. access to the internet should be not entirely necessarily a right but at least not fully a privilege you know how do we deliver high speed high quality internet access to

poor people without asking them to leave their home and go into those public libraries that are now being swamped. we decide what basic which is what we did for electricity we say. look every american needs a particular kind of connection to the internet just to be dignified to have a respectable life and we say let's say it's one hundred megabits per second download and upload and then you figure out what system of cross subsidies support for expensive to serve areas and also price controls in places that are less dense is essential in order for competitive areas there needs to be a wholesale provision that allows for lots of retail competition where that's possible in areas that can't be subject to competition we need to subsidize and bring everybody up to the same level this sounds now impossible to american years but eisenhower a republican president made sure that the country had an interstate highway system

that serves the entire country and was public trust developed by the government in its role as a steward for the common good what's hopeful right now is that millennia old people in their twenty's really understand this and for them internet access is like breathing they really can't understand why it's so expensive and so second rate and why so many people are being left out so they will be aleck ting representatives on this basis we just need to speed up this process and i think that they're starting to also figure out how the rest of the world is doing i was in germany. and talking to a friend who's a german about high speed internet access on his phone and my phone and i and i said was paying about two hundred fifty dollars a month eighty for my i phone here and it was his response was your response he started laughing he said are you serious started you know these and i said what do you pay and whose it was five times faster while mine was actually very fast when i got to germany but it's very expensive i ended up with almost a four hundred dollars data bill by the time i got home and he said oh it's about

thirty dollars a month i think thirty five dollars a month if you drag so it euro's absolutely so in europe for about twelve dollars a month you can get unlimited phone service. unlimited data and everything you need in the united states that same service from for eyes would cost about ninety dollars a month so the differential is really striking unfortunately miracles don't care much about what happens outside our borders which is why the experiments inside this country with symmetric fiber connections are so important they're like our world's fair word for electricity we're going to see as the kansas city network that google is building becomes more a part of our consciousness what's possible with very high speed inexpensive networks across the country so bringing this about you work through the f.c.c. in fact katrina vanden heuvel on this program a friend recently penned an article in the washington post recommending use the chair the next chair for the f.c.c. which increasingly sells a great idea to me. do you think that the commission has done its job in protecting

consumers and use those an appropriate role for the f.c.c. to be bringing about this vision that your circular to the f.c.c. is statute would allow it to take all of the actions that i've just described the problem is they're under enormous political pressure there is no upside to taking on the incumbents at this point because the budget guys the appropriators on the hill. could be stirred up by the incumbents if they're if the f.c.c. tries to do anything serious and the budget for the agency could be gutted so the political pressure to which the f.c.c. is subject is really extraordinary what station and they are the solution is leadership it took f.d.r. it out it took the president to take on the electrical private companies in the twenty's and thirty's today it would take president obama putting this on the top

of the list you know next to immigration gun control everything else he's got to do with the economy has to be the legacy of creating an infrastructure for the country that will sustain us for the long term. it would be a very substantial step for him to take he needs to do it if this is going to happen well and after world war two our debt to g.d.p. ratio was one hundred twenty seven percent it was much higher than it is right now and going into the eisenhower administration it was still quite high and many economists argue the eisenhower paid down the national debt by stimulating the economy by building the interstate highway system by putting people to work building this national infrastructure couldn't build an international broadband system be the stimulus that could bring about full employment and at the same time upgrade america to world class status data. that's quite a vision that we probably do something more incremental at this point in our

country we would help all of those municipal networks come to being we'd find ways to connect them but absolutely the potential for economic growth increased productivity new ways of making a living you know new richness in america could be spurred by not just paying for some parts of this high speed internet access network but also loaning out capital to new competitors who want to build part of the network themselves right now this is like it's a luxury and so access to capital is very difficult and there isn't the sense that the long term payout makes sense for wall street which is used to very short term investments we need to change the nature of the capital relationship to these infrastructure projects and then we'll see these very long term spillovers that will be the extraordinarily helpful for the country so how do we change the nature of the capital relationship to. oh there's so many great ways to that we could have local infrastructure banks where communities put their skin in the game and said we

want to loan out to infrastructure providers that will build what's needed and then will be paid back over time as people subscribe this is what stockholm did is a bunch. countries in asia have found ways to just risk the capital and then get it back and get it back in spades because their costs of communication go down far down over time so local infrastructure banks would make a lot of sense increased federal stimulus grants would make sense there was a seven point two billion dollars stimulus program at the beginning of the obama administration which is a bright light of the administration and we should redouble our efforts in that area especially for areas that are difficult to serve make it easy for new entrants to get some of the existing universal service fund that we're already paying for right now it's going right into the pockets of the incumbents and not delivering us the kind of world class service we need so lots of ways to improve the flows of

capital here and help the country as a whole remarkable susan crawford. extraordinary conversation extraordinary book thank you so much for being with us tonight oh it's been a great pleasure thank you so much thank you. to watch this conversation again as well as any of our other conversations in the great minds go to our website conversations with great minds doug. potentially deadly blizzard taking aim for the northeast it's expected to hit stunning in a few hours from new york to maine we have team coverage of the storm. but what we're watching is the very heavy snow moving into boston proper earlier today it was very sticky you can see it start to become much more patrie down to the bottom line there is still a lot of snow out here

a good place for snowball fight the flu. season it is going to be pretty incredible day there and even record snowfall throughout much of a night nobody's allowed to be driving less and some emergency vehicles are exceptional. the worst cure for those things. the white house soup of the day on the radio guy and claudio minestrone click off that i want you to watch quote for a blog to do because you've never seen anything like this on cold.

mornings today violence is once again fled the film these are the images the world has been seeing from the streets of canada. the giant corporations are on the day. but international landlords in the very heart of moscow keep.