Light travels at roughly 186,000 miles per second in a vacuum. That equates to roughly 3000 miles in 1/60th of a second. To ping something, a signal has to leave your computer, reach the host, and return the signal. So you can cut that 3000 mile number in half for the initial and return signals, turning it to 1500 miles. Add in slight delays in hardware, routing, processing, etc. and that number drops even further. Add in even a few more delays in the stall time between another player contacting the host being offset slightly from your own connection (say you're both half a heartbeat off kilter, add another 1/90th of a second to the communication time).

It has very little to do with broadband, really. It has been said that "the bandwidth of a shipping crate full of hard drives should not be underestimated", and it's true. The round trip is immense, but since you're moving teras at a time, the bandwidth is still huge too. Fiber can help, but at a point you have to put even the speed of light arguments aside: most of the time is spent in routers anyway, and that is not just going to go away.

"Regional" lag really depends on what your regions are. I don't know about the US, but 100ms across Europe are nothing to be surprised of, with a good lag-wise connection. But, really, what are the regions going to be? America(s), Japan (with Asia) and Europe (meaning the usual PAL)? That would suck big for the Aussies, but OK, I'll add Australia and New Zealand as one(?) region. And what about, I don't know, Mexico, Chile, Singapore (just thinking of some countries I know the Wii is available in right now). And if you then procede to partition your regions further, cause the lag sucks, I ask again, what of these regions where consoles sell perhaps only in the tens of thousands, and individual games much less than that? How are you going to do random ranked matches there? And how worse will it be a year after launch with even less people?

Certain games, like racing sims, are more or less predictable and somewhat adjustable most of the time. You predict the trajectory isn't going change much, and if it does change more than you expected it to, you adjust it slightly to reality a tenth of a second later - no big deal. If done well, no one notices. Most of the time. Well, except for crashes.

Fight sim, is another story. Starting a move a tenth of a second later does matter for some games. Not necessarily games that I like, with not being good on reflexes, but for some people I know, it's just their type of thing. Plus we're either talking unconfirmed packet delivery, were ping is an accurate mesure in server-clients architecture, but you can totally miss moves on packet loss, or confirmed delivery, where depending on how you do stuff, perceived game latency can double, and you certainly take a hit and strange shit happens on packet loss.

So, if the choice is between a degraded experience for hard core fans of a hard core game, or no online option, what would you chose? Cause, you know, sometimes it really isn't laziness.