Oh Look, Yet More Efforts To Strangle Broadband Competition

from the ill-communication dept

A major component of the Telecommunications Act of 1996 was the idea of line sharing, or local loop unbundling. Simply put, the rules set forth required that incumbent telcos needed to share their networks with smaller competitors, providing wholesale access to bandwidth. It was an effort to foster something vaguely resembling competition in the broadband space by letting smaller companies piggyback on existing network infrastructure. The thought was that because the barriers to market entry were so high (both politically and financially), this could help smaller competitors gain footholds that would otherwise be impossible.

The effort didn’t work out for several reasons.

One, incumbent ISPs quickly got to work trying to make the process as difficult as possible, often causing intentional delays as smaller ISPs (CLECs) attempted to connect to incumbent networks (ILECs). Big ISPs also got quickly to work lobbying to kill the effort, and by the early aughts had largely succeeded. Big ISP executives then proudly proclaimed the effort was a failure from conception, ignoring that other countries, like France, took the idea and utilized it to great success (users in Paris can now get TV, broadband and phone service for a small fraction of what users in the States pay).

That said, there were plenty of terribly-run ISPs from that era that died thanks to their own incompetence and terrible business plans. But by and large line sharing was a concept we never truly tried to make work. Still, some smaller ISPs not only survived, but thrived thanks to the rules.

Like independent California ISP Sonic, which utilized those early line-sharing relationships as intended, and slowly-but-surely built out their own network on the back of the initial sharing relationship. Big ISPs like AT&T and Verizon, however, are now attempting to kill the last vestiges of those rules. In a recent blog post by telco lobbying organization US Telecom, telcos argue that the rules are no longer necessary, and (much like their attacks on net neutrality) eliminating them will drive all kinds of amazing “innovation and investment”:

“This month, USTelecom is petitioning the FCC for nationwide forbearance from rules created in 1996 that no longer make sense in today?s marketplace. Specifically, the petition focuses on unbundling obligations, which require some ILECs (incumbent local exchange carriers, a.k.a. local telephone companies) to sell access to parts of their networks to certain competitors at extremely low rates set by regulators.

These outdated rules distort competition and investment decisions. When outdated and overly restrictive regulations are rolled back, innovation and investment thrives. And for over two decades, the broadband industry has transformed how the world communicates under a light-touch regulatory structure that spurred over one and a half trillion dollars in private investment.”

The EFF’s Katharine Trendacosta has drafted a good explainer outlining how these claims are complete nonsense. In it, Trendacosta is quick to point to recent studies showing that small ISPs have accounted for nearly half of all fiber deployment in recent years as companies like AT&T and Verizon instead focus on flinging video advertisements to Millennials (poorly, it should be noted). She also notes how if you cut off these smaller ISPs’ fledgling access to incumbent networks, you’re likely going to stifle a huge number of efforts aimed at shoring up connectivity shortcomings:

“With their forbearance petition, big ISPs are seeking to end a requirement that creates competition and spurs better and faster Internet coverage. New ISPs use the guaranteed access to copper lines to get a foothold in a market and to build capital. And then it?s these local ISPs that build high-speed infrastructure and cover rural areas. These are two things not being done by big ISPs, who would have even less incentive to do anything if these local ISPs vanish.”

This is part of the reason that the folks who simply cry out for “total deregulation” of broadband are missing a huge chunk of the picture. When you eliminate regulation in telecom, all you’re left with is giant, natural last mile monopolies by Comcast and AT&T. With neither competition nor functional adult regulatory oversight in place, the terrible broadband you currently “enjoy” tends to only get worse. Natural competition can’t emerge in that paradigm because the cost of entry is too high, and companies like AT&T all but own countless state legislatures and regulators (aka regulatory capture).

These line sharing rules telcos are petitioning the FCC to eliminate were an attempt to let smaller competitors piggyback on the shoulders of (heavily taxpayer subsidized) giants until they can begin building their own networks. That’s something that worked very well for Sonic, which is now slowly expanding fiber in key parts of California. Sonic and numerous other ISPs recently met with FCC boss Ajit Pai, whose words say he’s all about solving the digital divide, but whose actions generally reflect other motivations.

With so much going on, this battle over wonky 90s telecom policy will be something that could easily fall through the cracks, though the EFF’s comments to the FCC explain why that would be a terrible idea if you’re interested in fixing our comically-broken broadband markets.

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Companies: at&t, us telecom, verizon

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Comments on “Oh Look, Yet More Efforts To Strangle Broadband Competition”

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Anonymous Coward says:

Re: 230

Mr. Smith, just how do you envision how the internet would work without 230? I see you jumping on it with great venom.

It would be quite different. But I suppose that is what you want. No user generated content – anywhere. Reddit, Blogs, comment sections like we have here would all be impossible.

How do you picture things working if the laws were changed to fit your ideal?

James Burkhardt (profile) says:

Re: Re:

I would argue that you miss the detail on this situation. Namely, when discussing the burden of Local loop unbundling, telecos use broad language that is short on detail, always highlighting the ‘burden’, but never explaining what that burden is. Never explaining the scenario in which the presence of this rule makes difficult or impossible moves that are beneficial to consumers. Because there aren’t any. Even in a world of competition, I have been unable to find anyone who supports repealing local loop unbundling who can articulate the ‘burden’ it places on incumbents.

Contrast this with the support SEC 230, where Techdirt has repeatedly noted how it A) prevents a disincentive to moderation, allowing sites to moderate without fear that moderation will create liability (something that happened prior to SEC 230) and B) puts the focus for illegal or Tortuous conduct on the entities responsible, which can include the website, but often does not. Support for SEC 230 comes out of articulable concerns about the internet post repeal.

A better contrast comes in the DMCA and calls for its repeal, as we now discuss arguments for repeal on both ends. And again, we see clear, detailed, articulable concerns about how the DMCA is harming both consumers and creators. The abuses we have seen in the take down provisions combines with a lack of legal remedy for those abuses created by poor drafting and bad jurisprudence. The way the anti-circumvention provision has been used to prevent repair, security research, and circumvent the right of first sale. I can point to specific events if you want to hear it, but the point stands that we can point to not just theoretical harm, but real world harms that have occured. And while yes, the repeal of the DMCA might have negative effects for some content creators, Techdirt has, in my memory, generally called for an overhaul of the system, not tearing it down. Notice and notice, rather than notice and take down. Reinforcing fair use and allowing fair use to bypass technical protection measures. Establishing real legal repercussions for the abuse of the law.

You might think that looking at the effects on consumers and creators rather than copyright holders is ‘obfusication’. Or a focus on cost-benefit concerns in enforcement efforts is just ‘spaghetti logic’. But here in the real world, those type of concerns are major legal and business concerns, respectively, and should be considered when discussing these topics.

Anonymous Coward says:

Re: Re: Re:

Even in a world of competition, I have been unable to find anyone who supports repealing local loop unbundling who can articulate the ‘burden’ it places on incumbents.

Competition is the burden to the incumbents. The competitors provide the same service better and faster.

Other "burdens" exist but are fully compensated. The incumbent has to run the network (for money), install service (for money), &c. For all the whining, no incumbent has ever found itself insolvent or bankrupt because of unbundling.

Anonymous Coward says:

Re: Re: Re:

I’d love to see some smaller ISPs like Sonic offer unbundling, to demonstrate what they envision and prove it won’t be a huge burden. Like Google Fiber’s (abandoned) plan to run an Open Access network. Perhaps with a reciprocity clause, so ISPs taking advantage of it have to open their own network on the same terms.

Anonymous Anonymous Coward (profile) says:

The marketplace that is, or could be?

"This month, USTelecom is petitioning the FCC for nationwide forbearance from rules created in 1996 that no longer make sense in today’s marketplace."

This is absolutely correct, from the big Telco’s point of view. They are working to complete their monopolistic framework and letting peons in on the infrastructure grab makes no sense for their plans. Their desired marketplace.

On the other hand, should the ruling go the other way, not just letting the small guys in, but removing the obstructions created by the ILEC’s, the public could benefit greatly. That is to say, the public benefits greatly, the stockholders not so much. Thus, the actual, uncontrolled (by the ELEC’s) marketplace. Something the FCC and FTC should be working hard on, in the name of the people.

Anonymous Coward says:

Now correct me if I’m wrong but I know that in most European countries line-sharing was instituted because the infrastructure was originally owned by state-run and owned companies while in the US they are/were build by private enterprises. For my home country The Netherlands the cable network has no line sharing (yet) only the telephone/fiber, both maintained by a former state-owned companies has this. Of course the end result is still good for us, fierce competition and lower prices, but there are historical reasons for the difference.

Mike Masnick (profile) says:

Re: Re:

Now correct me if I’m wrong but I know that in most European countries line-sharing was instituted because the infrastructure was originally owned by state-run and owned companies while in the US they are/were build by private enterprises.

Not quite. In the US, cable infrastructure has not had local loop unbundling for those reasons, but telco lines did because while they were not "state owned" they were originally built with state support by AT&T, which was literally the monopoly provider of telephone service. There was an antitrust case that broke AT&T up and opened the door for other players to enter the market, though there’s been tons of consolidation since then.

But the original AT&T was as close to a state-run operation as is possible without it technically being "owned" by the state.

Ninja (profile) says:

Re: Re: Re:

I’m inclined to think it’s pretty much the same situation everywhere with some variation in the details. I think the main scenarios you’ll find are: state owned infra-structure that gone private, state funded infra-structure that is private but tied to obligations (ie: you get tax breaks but you must deploy network in this rural area) or partially state owned infrastructure that is open to use by the private sector that spawns private network coverage that co-exists with the state network (either as redundancy or as complementary coverage). I’ve yet to see anything built from the ground without some state support that has any meaningful coverage.

In any case, it’s clear that the financial barrier to enter this market is high enough that justifies help from state with regulations to foster competition on the other end. Seems reasonable and fair. And needed since most companies won’t want to share the wealth voluntarily.

ECA (profile) says:

Re: Re: awwww pooor capitalists

free market is not desirable to capitalists.

The only free market, is to say..
YOU got that side of the mississippi, we get the other.

Love the words, free market and others MEAN nothing.

If they did, how many Companies would POP up from other nations to sell goods directly to us?? AT cheap prices.
(yes, there are a few)

ECA (profile) says:

“overly restrictive regulations are rolled back, innovation and investment thrives.”

In what alternate Dimension(Dementia) does these corps live in?? WE KNOW better. WE have watched them for years, CUT every corner and NOT upgrade anything unless it was OVER paid for, 1000 times, OR the Gov. paid for it and Forced its installation.

“distort competition and investment decisions”
WHAT competition, What investment..Corps pay for nothing. THATS why we pay them, forced payment for services that SHOULD be fairly free..(almost cheap)(only thing worse is full control of our food source/supply)

“over one and a half trillion dollars in private investment”
Private?? WHO paid it? THE CUSTOMER, with raised prices, and Second and Third services.. Phone, cellphone, Internet, TV. WHICH could all be combined into 1 line to your home.
Do you think the prices will ever drop?? NOPE.

“sharing rules telcos are petitioning the FCC to eliminate were an attempt to let smaller competitors piggyback on the shoulders of (heavily taxpayer subsidized) giants until they can begin building their own networks.”

Even stated here..THEY ARE SUBSIDIZED..and there are reasons that is so. BUT, how many locations in the RURAL areas were built up for these services BY the Major Corps.(Im not saying telco, because its not JUST the 1 service, its 4 services they control)
In my area, only 1 Area service has Expanded Their service, and it still sucks.. AT&T, and DSL.. Every other area has been installed by Smaller Cable corps and Wireless companies(with access to ISDN and/or High speed cable or even DIRECT FIBER ACCESS)(guess where the main lines are running)
YOU COULD…Startup a small, county ISP system, fully install everything and get BOUGHT OUT by the Big corps.. But, the big corps, have regulated/contracted the states to ONLY LET THEM DO THE WORK..which they wont do. They would have to hire OTHER companies/installers to do the job.

To anyone that hasnt noticed.
MOST corps break up services and hire them out.
From installation, Customer service, Tech repair, billing services, EVERYTHING.. Because in small companies they can get away with paying MIN WAGE.. Where 5-10 people on top get LOTS of money(for every penny NOT paid to employees), and the employees get hired and fired ALL the time.

Good Luck people. They make this country so complicated, that you cant tell the players from the Janitors..

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