Oh Look, Yet More Efforts To Strangle Broadband Competition

Broadband

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.

Filed Under: broadband, competition, local loop unbundling
Companies: at&t, us telecom, verizon