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Where are the Internet Cooperatives?

August 16, 2011

Bear with me, there’s a bit of an introduction. If you’re familiar with cooperatives, or just want to cut to the chase (although I don’t recommend it) you can skip down here.

An Introduction to Cooperatives
Recently, I had the opportunity to attend National Rural Electric Cooperative Association Youth Tour, a program sponsored by American electric cooperatives that sends rural youth to Washington D.C. to learn about cooperatives and the political process.

For those unfamiliar with a cooperatives, I won’t go into a full explanation here, but in quick summary, a cooperative is a corporation whose owners are it’s customers. Rather than being owned by stock investors, cooperative “members”, as the customers are called, actually own the company, and a Board of Directors is chosen from the members themselves. Cooperatives make no profit, and all income not used to meet expenses is returned to the customer. You can read more about cooperatives at the National Cooperative Business Asssociation “About Co-ops” page.

Cooperatives are a bigger part of the American economy than most people realize. The NCBA reports that cooperatives:

“…own more than $3 trillion in assets, and generate over $500 billion in revenue and $25 billion in wages. The estimates that cooperatives account for nearly $654 billion in revenue, over two million jobs, $75 billion in wages and benefits paid, and a total of $133.5 billion in value-added income.”

Additionally, electric cooperatives, one of the largest cooperative industries in America, despite only delivering 10% of power in the United States:

“Own and maintain 2.5 million miles, or 42 percent, of the nation’s electric distribution lines, covering three quarters of the nation’s landmass.”

Cooperatives are a powerful force in distribution of electricity. Because they don’t aim for profit, they can offer the cheapest prices, and, in a desire to serve their members, offer the best of service.

U.S. Broadband as It Stands
Everyone knows the state of American broadband is poor, and this is in no small part due to large, regionally monopolistic ISP’s like Comcast, AT&T, Verizon, Cablevision, and Time Warner Cable. Although there is some conflict over the analysis, data from the Organisation for Economic Co-operation and Development’s 2010 report still leaves the U.S. at 15th worldwide in broadband penetration, and much less disputed 19th in cost–Ars Techinca’s Nate Anderson cites the embarrassing statistic:

“US broadband turns out to cost $8 for each advertised Mbps of service. In Korea, it’s $1.76. The UK, not known for fast speeds, but having decent competition thanks to line-sharing rules, is $1.98. Japan is $2.33″

A report from Engadget shows that this is in a large part due to a regulatory difference that increases local competition and drives down prices:

“‘local loop unbundling’ — other providers could lease the loops of copper that runs from the telephone company office to homes and back and set up their own servers and routers in BT facilities.”

Perhaps worse than the lack of competition, poor pricing, and below average penetration of U.S. broadband, are the numerous customer rights abuses these companies can feel free to practice given a customer’s lack of choice. Many companies have a “Fair Use” or “Acceptable Use” policy–you can read Comcast’s here as an example–a policy that sets a hard data cap (for Comcast, 250GB) on Internet service “unlimited” that is frequently advertised as “unlimited”. Not only does this qualify as extremely questionable advertising, but the policy itself can be an extreme hassle for customers–see Andre Vrignaud, who had his Internet cut off for one year due to 250GB of legal use. To make matters worse, Mr. Vrignaud has almost no alternative for Internet, as he says in a later post that Comcast is the only service with greater than “10Mbps broadband service to the home”.

Where are the Internet Cooperatives?
Cooperatives offer a simple, albeit challenging, solution to a complex problem. If we, as Americans, are fed up with the state of broadband–with corporations who drive up prices, set arbitrary usage caps, or perform any action on a long list of customer abuses, why don’t we come together and establish broadband service for mutual benefit? In industries such as electricity, cooperatives offer the best customer service and cheapest prices–much easier to do when your company requires no profit, and its decision making body is comprised of its members. When Sonic.net can offer 1Gbps data for $69.99 a month (this article points out, when compared to Comcast’s “1.5Mbps service for a list price of $40″, this is a “600x faster at only twice the price”) without data caps, and make a profit, imagine what a customer focused cooperative could offer, in terms of speed, pricing, customer service, and more! Internet/Broadband cooperatives could offer the local competition necessary to take down regional monopolies, simultaneously lowering prices and spurring innovation while offering better services! With U.S. government in an increasingly regulation-hostile mood, cooperatives offer a way to fix American broadband without government regulation–we don’t need local loopback unbundling or strict regulation of service and advertising when cooperatives simply offer better service, forcing businesses to improve their services or get left behind!

Frustration with American broadband is growing–it plays a large part in this week’s initiative by technology news website Gizomodo, “Fix Cable”. An introductory article speaks on this frustration, and lays the blame on government regulation. While they might not be wrong, there is an alternative! If select number of determined activists get together and establish broadband cooperatives–if we as a people are willing to put our money into these, to help them establish themselves and grow–we bypass the muck of government regulation and the mess of big business and make the change ourselves! American Internet is greatly in need of change, so once again, I ask–where are the Internet cooperatives?

What Can I Do to Help?
If you would like to assist in the establishment of Internet cooperatives, you can do a number of things:

  • Raise awareness of the cooperative movement. Not many people know what a cooperative is. Send them here, send them to the NCBA, or tell them yourself. Even sharing this post can help. Tweet it, share it, upvote it, what have you.
  • Establish a cooperative. If you’re interested in business, or just want to be a huge part of this movement, start an internet cooperative in your area. This would be no small endeavor–in fact, it could possibly be a career–but it is possible, and will have to happen if we want to see Internet cooperatives. If you would like to pursue this, the NCBA has a help page for starting a cooperative.
  • Provide pressure. Pressure the government to make cooperative friendly legislation. Pressure the National Rural Telecommunications Cooperative to spend less time partnering with existing carriers or pushing DirectTV and spending more time cultivating local cable and broadband cooperatives
  • In Conclusion
    American broadband is a mess, and neither government nor business offer an effective avenue to fix it. We must circumvent this entire system with a grassroots effort. Eighty years ago, electricity was as much a luxury as Internet is today. Cooperatives came into this city-only industry and help make it the nationwide guarantee. Although they face a much greater challenge today–modern Internet Service Providers are bigger, more politically powerful, more widespread, and better established then electric utilities of those days–we must follow their lead, and carry a movement for broadband cooperatives across the United States. Through this, perhaps one day, the U.S. can offer the same cheap, fast, widespread Internet offered in other countries–and who knows, if cooperatives can become truly widespread, maybe even better?

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From → Politics, Technology

3 Comments
  1. Excellent Thanks! If we users have “shares” not only in broadband but also in social media, we will be really owners of our own information, and know where is it going. We will end the business of databases and to assert our privacy rights.

  2. Jared permalink

    Outstanding post! I’m ready to start one in my area. I’m going to read up on starting cooperatives on the NCBA site.

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