Google, Ting, Netflix Dare To Suggest That Maybe Giant, Anti-Competitive ISPs Shouldn't Be Writing State Telecom Laws

from the pay-to-play-legislation dept

For years now, we’ve noted how state legislatures are so corrupt, they quite literally let giant ISPs like AT&T and Comcast write state telecom law. These laws, as you might expect, do everything in their power to keep the pricey, abysmal customer service broadband status quo in place by hamstringing any and every attempt to bring competition to bear on these complacent duopolists. That’s particularly true of the anti-community broadband bills passed in more than 20 states that prevent towns and cities from upgrading their own local telecom infrastructure — even in instances where incumbent providers refuse to.

This kind of protectionism is precisely what’s going on right now in Virginia, where incumbent broadband providers have convinced (read: thrown a lot of money at) state Delegate Kathy Byron to propose HB 2108, aka the “Virginia Broadband Deployment Act.” The act does nothing to improve broadband deployment; in fact it does the exact opposite, preventing ad-hoc community broadband solutions in light of market failure. It also saddles towns and cities with all manner of restrictions, forcing them to get approval by committees stocked with incumbent ISP lobbyists if they want to even strike public/private broadband partnerships.

Byron has been under notable fire the last few weeks by folks who believe, crazily, that perhaps you shouldn’t let giant ISPs with decades of documented anti-competitive behavior write state telecom policy. While Byron has tried to claim that hamstringing towns and cities will somehow improve broadband expansion and pricing, other locals have been busy calling a spade a spade:

Opponents argue that the bill would discourage competition that would drive down broadband costs for poor Virginians and that it would hamper existing municipal broadband networks from providing a necessary service.

The Roanoke City Council unanimously condemned HB 2108 on Tuesday, claiming it would endanger a $9.6 million investment by the city and other local governments in the Roanoke Valley Broadband Authority.

?I?ll call it what it is ? an effort by the legacy carriers to protect their turf,? Councilman Ray Ferris said, according to the Roanoke Times. ?It?s crony capitalism at its finest.?

Opposition to Byron’s bill includes incumbent competitors Google, Ting, Netflix and others, who collectively penned a group letter to the Chairman of the Virginia House Commerce and Labor Committee (pdf), noting that the measure actually makes broadband connectivity in the state worse:

“If enacted, HB 2108 would not only hurt Virginia?s localities and their residents, but it would also harm the private sector in multiple ways. Among other things, it would derail or unnecessarily complicate and delay public-private partnerships. It would interfere with the ability of private companies to make timely sales of equipment and services to public broadband providers. It would deny private companies timely access to advanced networks over which they could offer business and residential customers an endless array of modern products and services. It would also impair economic and educational opportunities that contribute to a skilled workforce from which businesses across the state will benefit.

The letter also proceeds to crazily suggest that maybe, just maybe, decisions on local infrastructure should be left up to the voters, not the CEOs of Comcast, CenturyLink, or AT&T:

Communities in Virginia are eager to work with willing established carriers, enter into public-private partnerships with new entrants, develop their own networks, if necessary, or create other innovative means of acquiring affordable access to advanced communications capabilities. These are fundamentally local decisions that should be made by the communities themselves, through the processes that their duly elected and accountable local officials ordinarily use for making comparable decisions. They should also be able to use their own resources as they deem appropriate to foster economic development, educational opportunity, public safety, and much more, without having to comply with the bottlenecks that HB 2108 would impose.

As we’ve noted repeatedly, ISPs have been extremely successful the last fifteen years in passing these kinds of laws by framing this as a partisan debate, intentionally sowing division. But getting better broadband and improved competition has broad, bipartisan support. As does letting local communities decide for themselves what to do about the local infrastructure impact of obvious private sector failure. And these bills don’t solve any problems; in fact they make fixing the problem of spotty broadband coverage significantly harder.

Most consumers realize this, which is why, like so many tech policy issues incorrectly framed as partisan (net neutrality), these ad-hoc local solutions often see broad, bipartisan support among actual consumers.

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Companies: at&t, centurylink, comcast, google, netflix, ting

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Comments on “Google, Ting, Netflix Dare To Suggest That Maybe Giant, Anti-Competitive ISPs Shouldn't Be Writing State Telecom Laws”

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30 Comments
DannyB (profile) says:

Re: someone needs to argue the tax base revunue

It would seem that having even more broadband providers would mean even more businesses providing that service and which can be taxed.

Increased competition results is lower prices and better service (than Comcast provides). Lower prices result in sales of higher end broadband packages.

In addition to the Tax consideration, one should consider that the internet is the infrastructure of the new economy. Just as the interstate highway is an important infrastructure. It has social benefits that go way beyond being able to easily move military equipment around the 48 states.

Anonymous Coward says:

Re: Re: someone needs to argue the tax base revunue

The presence of additional businesses does not (at least in telecom) generally lead to significantly higher sales (as demand is more or less the same), and, in fact, generally leads to lower profit margins, and therefore less taxable business.

Or more generally, taxes are generally applied as a percentage of sale price, and as a percentage of corporate net income. Lower prices reduce the sale price and reduce net income, thus lower prices mean lower tax revenue. This can in some cases be counteracted by higher demand, but that is generally not true in telecom.

helldesk tech (profile) says:

Re: Re: Re: someone needs to argue the tax base revunue

I think you’re looking too small, my friend, as in limiting your view to taxes the current ISPs with a static customer base would be paying, if the only change caused by increased competition was merely lower costs to consumer and reduced corporate revenue. I don’t profess to have any kind of knowledge in economics beyond my MicroEcon 101 class, but I can guarantee that removing restrictions and increased competition will result in a larger amount of aggregate taxes into the State’s coffers.

How? If ISPs are to reach the more extreme rural areas and provide broadband as defined by the FCC to as many customers as possible, there must be increased infrastructure spending by all ISPs that want to gain customers. There will then be visible and verifiable spending in developing technology, not just lip-service promises most ISPs give now. Taxes are paid on such build out and research, and on salaries paid to line crews and lab technicians.

By making service more readily available to customers in areas currently underserved or ignored by incumbent ISPs – areas which will become enshrined as ignored if bills such as HB 2108 are passed – the number of customer accounts which can be assessed taxes will be increased. Increased competition will result in more affordable rates for base service packages, which will entice more consumers to subscribe for higher-tier packages and / or additional service packages, thereby increasing sales, which means – say it with me – increased taxes.

Larger taxable base, increased spending for infrastructure, and an incentive of value for consumers to subscribe to affordable premium packages, will result in increased taxes paid.

THAT I do know is part of the idea of economics of scale.

MWebb (profile) says:

Re: Re: someone needs to argue the tax base revunue

Absolutely! I was at the press conference last week at the VA State Capitol to oppose the bill on behalf of Ting, and outlined how this bill was anti-business and would stifle economic growth. I would characterize this type of legislation as protecting monopoly players in one industry sector at the expense of local businesses in every other sector.

The tax base argument actually extends further, to local property tax receipts. Having fiber-optic connections to the premise have shown to increase property values and rental prices, which in turn increases property tax revenues.

That One Guy (profile) says:

Re: Re:

Of course, because clearly when people sign on for internet service it’s with the understanding that it’s only to certain parts of the internet and/or services, of which the likes of Netflix aren’t included unless they pay extra.

The customers are the ones deciding to use Netflix so much, it doesn’t matter where the traffic is coming from, if the ISPs can’t provide what they sold then they need to be slapped down for false advertising otherwise known as lying.

That One Guy (profile) says:

Re: Re: Re: Re:

Yes.

So long as the customer is paying for the connection it shouldn’t matter where the content is coming from, and if the network can’t handle the load then it’s up to the ISPs to improve it, stop overselling it, or both, not Netflix to pay for what it’s customers are using the connection they’ve already paid the ISPs for to access.

The ISPs are trying to get paid twice, once from the customer for the connection and the content carried over it, and then again from Netflix for providing that content. How is that supposed to be fair?

Thad (user link) says:

Re: Re: Re: Re:

Netflix doesn’t just want net neutrality they want yo be able to force isos to spend more ti support them. Is that really fair?

Cox has jacked up my monthly internet bill by $30 over the past 10 years, without increasing my connection speed, has actually removed services (such as Usenet) in that period of time, and the last time I called them for tech support I was on the phone for three hours with people who kept insisting it was impossible to revoke a DHCP lease.

And Cox is one of the better major ISP’s.

Cry me a fucking river about how unfair it is that price-gouging monopolies only get to price-gouge their customers instead of also being allowed to price-gouge the companies that provide the content their customers are paying to access.

Anonymous Coward says:

What?
Our so called “law makers” do not write our laws?

Hahahaha, the joke is on you – because they neither write nor read them, just sign. US Congressional rubber stamp. It is interesting to note the oath which they swear to and how they violate same with little to no perceptible acknowledgement of their huge conflict. I doubt they admit to themselves that they are liars.

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