FCC Doesn't Think The Lack Of Competition Is A Major Barrier To Broadband?
from the are-they-not-paying-attention? dept
Reader Kasey Krehbiel alerts us to some news coverage of the FCC’s recently released list of seven “critical gaps” in reaching universal broadband (pdf) and is rightfully surprised to note that a lack of competition in the marketplace is not on the list. Such an absence makes you wonder if the FCC is really paying attention. Most of the other “gaps” would quickly disappear if there were meaningful competition in the market — but we’ve never had a real policy of encouraging broadband competition in the US. Instead, policy has mostly been driven by incumbents who have lobbied hard for exactly the opposite.
Filed Under: broadband, compeetition
Companies: fcc
Comments on “FCC Doesn't Think The Lack Of Competition Is A Major Barrier To Broadband?”
Paying attention? I would guess that cross referencing those at the top of the ffc’s resumes with names of isp parent companies and subsidiaries would provide a more instructive answer…
I think the FCC is paying attention, but looking at things in a different light.
Competition isn’t easy to just dream up. It is also expensive. In most areas, you already have competition (and it’s growing), typically from a phone company, a cable company, and now 3G wireless options. That doesn’t even come to mention the direct sat companies and other options that are out there.
Where is there no competition? Where it can’t be afforded. Example is areas where the phone company cannot justify the expense of a new head end to handle DSL for 25 homes in a rural area, or where there is no cable company. Don’t blame the incumbents because people chose to live far from civilization.
It would be interesting to see the numbers on what percentage of the US population has access to at least ONE broadband source at this point, I suspect the numbers are quite a bit higher than most would expect.
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And quite a bit lower if you use a serious broadband speed (say, 10Mbit+) for that census. 512kbit service is not broadband, no matter how much the cheap telcos would like to convince us that it is.
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“It would be interesting to see the numbers on what percentage of the US population has access to at least ONE broadband source at this point, I suspect the numbers are quite a bit higher than most would expect.”
ONE is not competition, ONE is a MONOPOLY.
Not everyone wants to be surrounded by humanity. so you’re saying that the only people who deserve access to broadband internet are people who live in densely populated areas. I don’t blame the incumbants for where I live, but I DO blame them for not INVESTING in better infrastructure in the US as companies have had to do in most other developed countries. And you know why they had to…..? Yep, you guessed it, REAL competition in the marketplace. I live in a VERY affluent suburb of Philadelphia and I have 2 (count them 2) realistic choices (don’t even start with satellite which is barely faster than dial-up) options for high speed internet. Most of Philly, in fact, has the same 2 choices I have. There may be resellers of one or the other, but basically you either have the phone company, or the cable company, and they know it.
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“It would be interesting to see the numbers on what percentage of the US population has access to at least ONE broadband source at this point, I suspect the numbers are quite a bit higher than most would expect.”
ONE is not competition, ONE is a MONOPOLY.
Not everyone wants to be surrounded by humanity. so you’re saying that the only people who deserve access to broadband internet are people who live in densely populated areas. I don’t blame the incumbants for where I live, but I DO blame them for not INVESTING in better infrastructure in the US as companies have had to do in most other developed countries. And you know why they had to…..? Yep, you guessed it, REAL competition in the marketplace. I live in a VERY affluent suburb of Philadelphia and I have 2 (count them 2) realistic choices (don’t even start with satellite which is barely faster than dial-up) options for high speed internet. Most of Philly, in fact, has the same 2 choices I have. There may be resellers of one or the other, but basically you either have the phone company, or the cable company, and they know it.
^^^^^^^^^^^^^
that post brought to you by DH’s love child…
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“that post brought to you by DH’s love child…”
And, by extension, me…
FYI, extension an awesome unintended pun…
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The helmet sure does fill that 30×30 pixel frame – WOW – that is some extension.
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Competition isn’t easy to just dream up. It is also expensive.
Not nearly as expensive as unregulated monopolies.
In most areas, you already have competition (and it’s growing), typically from a phone company, a cable company, and now 3G wireless options. That doesn’t even come to mention the direct sat companies and other options that are out there.
You left out carrier pigeons (faster than many ISP’s). They go everywhere, so there’s no place that doesn’t have “broadband”, eh?
What a crock.
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“Competition isn’t easy to just dream up. It is also expensive.”
No, you’re just telling lies again. The ONLY barrier to competition is regulatory in nature. You remove the regulatory barriers and competition WILL come.
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and if regulatory barriers aren’t the problem then removing those regulatory barriers won’t lead to increased competition. But why do those barriers exist? Because telco/cableco companies LOBBY for them because they KNOW that without them competition would exist. The regulatory barriers exist because they block competition, they don’t merely exist for no reason, they exist exactly because if they didn’t exist then there WOULD be competition. If this is not true then there is no reason to have those regulatory barriers.
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Sorry, but that is a fail.
Your cable company and your phone company are competition. They are deciding to stay out of certain markets or not offer service in some areas for reasons.
You want full phone or cable competition? Get ready to pay for it. Duplicate infrastructure, duplicate services, everyone with extra final mile wires. Yeah, I can see where this is going to happen.
So actually, what you want is some sort of way for other companies to profit from all the investment that has been made by incumbent providers to wire the cities and byways?
Yup, sounds like a plan. Totally unfair because cable companies can’t do it, so you are forcing only one side (phone) to share. Tried it in Canada, and honestly, it’s pretty much a fail.
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“Your cable company and your phone company are competition.”
Well, yeah, someone sending me information via CD’s and DVD’s is also competition. I can use snail mail to make requests via a piece of paper and they can reply with a CD.
“So actually, what you want is some sort of way for other companies to profit from all the investment that has been made by incumbent providers to wire the cities and byways?”
No, what I want is for them to EITHER ALLOW anyone to build new infrastructure OR to allow anyone to compete on the existing infrastructure (which, btw, was built a LONG time ago and there was plenty of time to recoup investments). The governments don’t allow either.
“You want full phone or cable competition? Get ready to pay for it. Duplicate infrastructure, duplicate services, everyone with extra final mile wires. Yeah, I can see where this is going to happen.”
Again, the reason competition is not allowed is exactly because those lobbying against it know darn well that without those regulatory barriers people WILL build new infrastructure and they WILL compete and that competition WILL lower prices and provide better service. Otherwise there would be no purpose in blocking such competition.
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They know that the competition will take away market share or force them to change what they offer in a way that they don’t like (ie: lower prices or faster service at the same price) so they lobby against competition.
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No, what I want is for them to EITHER ALLOW anyone to build new infrastructure OR to allow anyone to compete on the existing infrastructure (which, btw, was built a LONG time ago and there was plenty of time to recoup investments). The governments don’t allow either.
don’t forget that the phone infrastructure was built with government subsidy. in most markets the cable infrastructure was too. that’s why local cable companies are required to provide public access television. it’s part of the agreement.
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“Yup, sounds like a plan. Totally unfair because cable companies can’t do it, so you are forcing only one side (phone) to share. Tried it in Canada, and honestly, it’s pretty much a fail.”
and why can’t cable companies do it? Cable infrastructure has been laid out more than long enough to recoup any investment, and certainly much longer than is necessary for current revenue on the infrastructure to not add much to the present value of investment at the time the infrastructure was put in place (the present value back then that is).
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You have to study the function of cable TV to understand why the cable cannot easily be shared. Basic understanding of the technology at work is a good place to start.
Read up, and then come back for more discussion once you understand why cable can’t share.
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Phone and cable companies do not share infrastructure. I don’t know what the hell YOU are thinking.
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I live in a rural area. 3 miles from the nearest town 24k plus a little bit more from the nearest phone company central office. I have their “extended DSL” plan. My speed, well, they won’t guarantee me ANY speed, only a connection, right now I’m at 256k, and for this I get charged $40 a month. Wireless you say? $60 a month and speeds equal to or less than my current DSL speed of 256k. Satellite, tell me another joke, minimum $400 for the equipment and the lag time is ridiculous. No cable in my area, why would they deploy cable three miles out from the nearest town? Now, a fried of mine, lives about 50 miles away, she is over 10 miles from the nearest town, but rather than a major phone company, her internet service is provided by a locally owned co-op. She pays about the same as my DSL and has a 10Mb fiber connection. If competition existed in my area, I might have at least a 2Mb connection, but without competition, why should the phone company or the laggy wireless and satellite providers do anything to improve, I have to take what i can get or go without.
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Competition isn’t easy to just dream up. It is also expensive.
or just plain illegal, as evidenced by the muni-fiber and muni-wifi programs that get their plugs pulled due to pressure from incumbent providers:
http://www.techdirt.com/articles/20091030/0350266731.shtml
In most areas, you already have competition (and it’s growing), typically from a phone company, a cable company, and now 3G wireless options.
BS. *IF* you are lucky enough to have access to broadband from both a cable company *AND* a phone company (good luck getting cable in an industrial zone) you are being served by a duopoly instead of a monopoly. that’s not competition. that’s replacing a dictator with a cartel.
real competition is having your choice of two telephone companies and two cable companies, or at least having access to a third option which is neither cable nor phone based.
3g wireless, with it’s 5 gig caps and terms of service that specifically state that you cannot use it as a backup connection or replacement for broadband don’t even register as competition. also, most wireless carriers are also in the residential broadband market and won’t improve the service to the point of being competitive with it’s wired broadband services.
It would be interesting to see the numbers on what percentage of the US population has access to at least ONE broadband source at this point, I suspect the numbers are quite a bit higher than most would expect.
i would like to see the numbers as well. i suspect they are lower, since the FCC currently uses data that’s wrong:
http://www.techdirt.com/articles/20060508/1839210.shtml
and that data is wrong because it was provided by the telcos who don’t want any competition:
http://www.techdirt.com/articles/20080717/1713101713.shtml
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Chris, it’s all find and dandy to say “competition is really this”, but the reality is that there isn’t enough money in most marketplaces to make that competition become a reality.
The US has a simple problem: SIZE and DISTANCE.
Everyone wants to live in remote areas, everyone wants space, and nobody wants to accept responsibility for it. Nobody wants to pay the true price of their connection, and then they bitch when they get crappy service.
If you live on the typical American “winding road” with minimum 3 acre lots, you paid for the privilege NOT to have good service. It would literally costs hundreds of dollars a month to provide you decent service. Why do you expect it for nothing?
All the great broadband centers (like Hong Kong, example) have nice high density living, where they don’t have to build a new CO to handle 20 customers on a 10 mile rural route. They put in one CO, and have thousands of clients right there.
The costs of your “real” competition would push your cable or DSL bill way past what you would consider acceptable, yet it would actually reflect the costs of providing and maintaining your service. Are you really willing to pay for what you are asking for?
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Chris, it’s all find and dandy to say “competition is really this”, but the reality is that there isn’t enough money in most marketplaces to make that competition become a reality.
Oh yeah? Then let the market say so, not you and other cableco/telco shills. And by “market” I mean the free market, not the one on Capital Hill where you guys buy political influence to protect you from competition.
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Chris, it’s all find and dandy to say “competition is really this”, but the reality is that there isn’t enough money in most marketplaces to make that competition become a reality.
is that so? tell that to the people investing in clearwire.
The US has a simple problem: SIZE and DISTANCE.
i am not talking about wheezer, idaho. i am talking about metropolitan areas with light years of copper wire strung over them having their municipal fiber and wifi programs blocked by incumbent phone and cable companies.
All the great broadband centers (like Hong Kong, example) have nice high density living, where they don’t have to build a new CO to handle 20 customers on a 10 mile rural route. They put in one CO, and have thousands of clients right there.
again, i am not talking about rural access. i am talking about big american cities on the east and west coasts where there are lots of apartment buildings, condo complexes, and brand new housing developments that can run new copper. in these “dense” populations the promise of fiber is now more than a decade old.
the telcos de-regulated in 1996 so they could raise funds to roll out modern networks. that’s 13 years. 13 years of monopoly or duopoly pricing and where’s the fiber? only in select parts of huge cities. the price of service has only gone up and up, so what happened to all that money? well, first we had to rebuild the old bell monopoly in the form of the AT&T and verizon duopoly…
The costs of your “real” competition would push your cable or DSL bill way past what you would consider acceptable, yet it would actually reflect the costs of providing and maintaining your service. Are you really willing to pay for what you are asking for?
right, the cost of letting a competitor into the market will raise prices?
you are saying that if the telco and cable companies stop giving money to u.s. politicians, our bills will go up? how does that make sense?
how exactly does it cost the incumbents to *stop* blocking municipal broadband? how exactly does it cost money to stop doing something?
please explain it to me as i am very curious.
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Where is there no competition?
Where I live. The only broadband available here is through the cable company and it isn’t exactly the best or the cheapest in the world. Of course it doesn’t have to be considering there’s no competition.
Warren Buffett, mister broadband… he bought Burlington Northern for right-of-way… his investment in Level 3 Communications, one of the largest broadband providers, just sky-rocketed… Level 3’s angle is laying fiber along rail-lines, add B.Northern to the equation… it’s huge, enormous…
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Warren Buffett, mister broadband… he bought Burlington Northern for right-of-way
Bought? After they were given to the railroads by the gov’t? What a sweet deal, especially for BN.
his investment in Level 3 Communications, one of the largest broadband providers, just sky-rocketed… Level 3’s angle is laying fiber along rail-lines, add B.Northern to the equation… it’s huge, enormous…
Off hand, that doesn’t sound like a plan to deliver broadband to end users. Unless Buffett is expecting the gov’t to give him more right-of-ways to reach them because few end users own property bordering railroad right-of-ways. It sounds more like a plan for a backbone system, of which there is plenty of capacity at this time all ready. That’s an idea that has been repeatedly pitched to the railroads themselves, who always rejected it after doing the math.
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Warren Buffett, mister broadband… he bought Burlington Northern for right-of-way… his investment in Level 3 Communications, one of the largest broadband providers, just sky-rocketed… Level 3’s angle is laying fiber along rail-lines, add B.Northern to the equation… it’s huge, enormous…
…and done before. It’s nothing new. Back in the mid 1990s there was a small company that did the same thing. The company was called Qwest and was led by Philip Anschutz. Their market capitalization skyrocketed, I think it was partially due to interesting accounting practices. Much of this has been cleaned up now, but the company’s market capitalization subsequently allowed it to swallow up USWest that had heartburn from acquiring PacificNorthwest, Midwestern, and Mountain Bell RBOCs.
Anschutz is an interesting character. His entertainment company, AEG, bankrolled Michael Jackson’s comeback tour, and his company is involved in “The Foundation for a Better Life” and is part owner of right-leaning The Weekly Standard. The Jackson thing is weird and throws me every time.
But, anyways, there’s Right-of-way available along most of the US interstates, so I hope it wasn’t just right-of-way that persuaded Buffet’s purchase.
Owned
The FCC is owned by communication companies! Big bucks are at stake so Big Bucks must rule. The US is one of the only first world nations to have deplorable broad band. Why? FCC is why.
RE: Rural America
If people choose to live in rural areas, then they get everything that goes along with it, including limited access to certain things. I don’t care how much “competition” you have, if a company cannot make money selling a good or service, they’re not going to sell it.
Only our gov would be dumb enough to mandate to the local cable or telco company that they have to lay down fiber to each farm in Kansas in order to increase broadband adoption, a “problem” which the FCC created so it can legislate a fix to show that it’s actually doing something. Is it possible it’s not being adopted now because those people just aren’t clamoring for it?
Who really cares what the adoption rate is of broadband in this country? So what if Taiwan and Japan have broadband to X% of the population. That sounds like the FCC is playing “keeping up with the Jones” if you ask me, and isn’t that a lot of what got us into this credit mess in the first place?
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Only our gov would be dumb enough to mandate to the local cable or telco company that they have to lay down fiber to each farm in Kansas in order to increase broadband adoption…
Yeah, they sure wouldn’t be dumb enough to engage some kind of rural electrification plan or to require that the post office service rural customers either, would they? Nah, it would be just stupid for the government to do things like that.
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Awesome comment, and right on the ball, Anonymous.
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Sadly, the post office is losing it’s ass right now, spewing red ink faster than a failing bank. Rural electrification is a nice concept, but there are still plenty of people who don’t immediately get access to power (in many cases, you can pay to have the poles installed and the cables run at your cost).
Both of those things have cost the US incredible amounts of money, to bring services to a very small number of people, at the expense of everyone else.
“Such an absence makes you wonder if the FCC is really paying attention.”
It’s just that the FCC works for big corporations, they’re not interested in providing better broadband at cheaper price.
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Unfortunately, correct…. to a degree that I hate. They are beholden to the big corporations, who after they serve their terms in government, give them jobs to compensate them for ruling in their favor for so many years.
It’s about time for us to pass a law that says that whatever industry you are regulating as a part of the federal government…. you can NEVER work for that industry after you leave the federal government, nor take any gifts from them, nor can your family do that.
“Nearly every community in the United States allows only a single cable company to operate within its borders. Since the Boulder decision [4] in which the U.S. Supreme Court held that municipalities may be subject to antitrust liability for anticompetitive acts, most cable franchises have been nominally nonexclusive but in fact do operate to preclude all competitors. The legal rationale for municipal regulation is that cable uses city-owned streets and rights-of-way; the economic rationale is the assumption that cable is a “natural monopoly.”
http://www.cato.org/pubs/pas/pa034.html
The fact is that this natural monopoly lie only benefits rich and powerful corporations at public expense.
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Since the Boulder decision [4] in which the U.S. Supreme Court held that municipalities may be subject to antitrust liability for anticompetitive acts, most cable franchises have been nominally nonexclusive but in fact do operate to preclude all competitors.
True. The way local governments get around that is by not directly outlawing competition, but just refusing to allow competitors right-of-way access. They say, “You want to start your own cable (or telephone) company? Well, go right ahead. We won’t stop you, that would be anticompetitive. Just stay out of the right-of-ways.”
Reinstate Judge Green's consent decree
Break up verizon and ATT back into its component RBOC’s. Exclude them from creating content or carrying Long distance traffic.
Bring back to life the IXC’s and national ISP’s. Force the RBOC’s to carry any ISP or IXC traffic to the customer premesis, for a regulated fee. Then let the content carriers compete for your business directly.
A Policy For Competition
Mike said: “…but we’ve never had a real policy of encouraging broadband competition in the US.”
I disagree with you on that. We had UNE-P as part of the in the 1996 Telecom Act. Unbundled Network Elements Platforms were requirements that the incumbent telcos (ILECs) allow competitors (CLECs) to use their last mile copper to offer services like telephone and DSL. The US quickly had competition for broadband, before the cable companies (MSOs) even got into the market.
During this time, the competition (and DSL in general) was very new, and was limited to metro areas. But our market was poised to have rapid expansion, steady progress, and ample competition to keep services improving and prices low.
The GREAT news is that this system actually worked. It worked very, very well. Prices under UNE-P are very low, speeds are fast, and new services are steadily added such as TV over IP, and cellular bundling. In fact, with UNE-P, for just $66, you can get a package with:
– a mobile phone with 120 nationwide minutes
– unlimited mobile Internet and SMS
– 20Mbps home DSL
– 90 channels of TV
– home phone line with free long distance
– PLUS one free month for new clients!!
Are you wondering whether I’m stoned? I’m not. Everything I’ve written is correct. The bad news for US-based readers is that none of that great competition applies to you. While UNE-P was enacted in the US in 1996, it was repealed in 2005 as the result of powerful lobbying from the incumbents to republican and democrats congress critters alike. Meanwhile, the long-term benefits of competition and UNE-P, as described in the paragraph above, have actually accrued to consumers in other countries, such as the UK and France. The example I cited is the Tout-en-un Ideo package for 44 euros from French carrier Bouygues Telecom. http://www.ideo.bouyguestelecom.fr/
Think of the line from The Who’s “Tour Bus”:
I want it, I want it, I want it.
Caaaaaan’t have it.
So Mike, we did have a real policy to encourage broadband competition in the US. It was a policy that works – not just in theory, but in many proven cases abroad. We just don’t have such a policy today.