Telcos Resisting Broadband Stimulus Because They're Worried It Might Force Them To Compete

from the if-they're-all-upset,-that's-a-sign dept

We've had a lot of concerns about the broadband stimulus package, since it was shaping up to look like little more than a handout to incumbent operators who have a long history of grabbing public money, then not living up to the promises they made to get it. The real problem underlying most issues having to do with broadband in the US is a lack of competition, so any stimulus needs to address that, instead of just throwing money blindly at broadband providers. Mobile operators have already complained about anything that might force them to compete interfering with the government broadband giveaway; now BusinessWeek reports that several incumbent telcos are holding back from the stimulus, because they're afraid the government will attach strings to it to try and increase competition. Most of all, they're worried they may have to allow line-sharing, which, of course, they worked very hard to get tossed out in 2005. The rules are still under discussion, but we're optimistic that the opportunity to effect some positive change on the broadband market won't get left behind in the rush to throw money at it.


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  1.  
    identicon
    Weird Harold, Mar 17th, 2009 @ 8:09pm

    Telcos will always resist it. It's normal for companies that have spent incredible amounts of money over time building a network to not be interested in giving access to that network at significantly less than what clients currently pay, it's normal business.

    Is there any word how the cable companies are handling sharing the last mile of their networks? Oh yeah, wait, this isn't aimed at ALL methods of broadband, just the series of tubes the politicians can understand.

     

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  2.  
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    Taxpaying Jackass, Mar 17th, 2009 @ 9:09pm

    Re: WH

    "It's normal for companies that have spent incredible amounts of money over time building a network to not be interested in giving access to that network at significantly less than what clients currently pay, it's normal business."

    Whose money were they spending ? ... Yours and Mine !

    Harold - dont be such a obvious pundit.

     

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  3.  
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    NotAnIndiot, Mar 17th, 2009 @ 10:02pm

    Re: Re: WH

    Actually, most telco's/utilities use their investor's money to place equipment, provide tech support and services to interconnect with other operators, including cable companies. Most equipment deployed for a residential customer can take up to 10 years to payback the investment, longer if you use standard accounting methods such as the time-value of money, depreciation schedules and the labor costs associated with customer service.

     

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  4.  
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    Weird Harold, Mar 17th, 2009 @ 10:05pm

    Re: Re: WH

    Yup, everything in the US is done with taxpayer money. No investors, no capital invested. Just our dime.

    Yeah, riiiight.

     

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  5.  
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    Nick, Mar 17th, 2009 @ 10:36pm

    Good. More money for the little guys who are actually interested in servicing the areas that the big telcos ignore!

     

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  6.  
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    Mike (profile), Mar 17th, 2009 @ 11:15pm

    Re: Re: Re: WH

    Actually, most telco's/utilities use their investor's money to place equipment, provide tech support and services to interconnect with other operators, including cable companies.

    Ah, only half of the story, though. Because due to subsidies and gov't granted rights of way, the gov't has granted these companies a defacto monopoly.

    And, like the highway system, there's a reasonable argument that these are natural monopolies (don't want to allow too many people to dig up everyone's lawn, after all). So there's quite a reasonable argument for line sharing.

    Furthermore, the doom and gloom scenarios that line sharing somehow takes away from incentive to invest or possible return isn't actually seen in many countries that do hang line sharing requirements on gov't subsidies and rights of way.

     

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  7.  
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    w, Mar 18th, 2009 @ 2:31am

    It's bigger than telcos

    In the early 1990's, Kentucky taxpayers funded broadband to schools and libraries, through the LECs (Local telcos). Once we bought them the infrastructure, they have monopolized the consumer and business market, with fairly thorough coverage for such a rural state. It's now one of the largest cash cows for the telcos here.

    State government rejected arguements that the public schools were bound to open their networks after school hours, like they must open the school after hours for other public uses, like meetings.

    Once the Feds began to offer incentives for more broadband to rural areas, the Kentucky legislature invited a study to examine the access to broadband in each county (and Kentucky has more of them than you can imagine)-it was frequently suggested in their public meetings that they map the _competition_, that is, map how many providers operated in an area. That map has never been produced.

    It's a nasty bedfellow thing here, where state government is part of the problem that retains exorbitant prices for broadband in most of the state.

     

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  8.  
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    Weird Harold, Mar 18th, 2009 @ 6:20am

    Re: Re: Re: Re: WH

    Mike, highways are a good example, but the point out the problem with the way the US government has approached broadband.

    Highways are mostly built by the people for the people. There are toll roads and such, but the vast majority (99.x%) of the road network is publically owned. There are very few PPP (Private Public Partnership) or outright private ownership with fees, at least in the overall scheme of things.

    In the case of broadband, instead of building a network, the government throws money at the people who have the monopoly already and make them stronger, and do so without restriction. So instead of turning the phone network over time into a government owned, leased to the service provider networks, the government has instead continued to build up the strength of the monopoly players. They didn't build any public roads, they just gave money to private companies and let them build toll roads all over.

    In Canada, Bell (the monopoly for a big chunk of the country) is pretty much saying it won't upgrade it's network if it has to share. http://www.electronista.com/articles/09/03/13/bell.threatens.can.govt/

    When forced sharing starts to make it less attractive to upgrade the network, then there is a problem.

     

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  9.  
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    Anonymous Coward, Mar 18th, 2009 @ 10:45am

    Re: Re: Re: Re: Re: WH

    The government (at least here in the states) throw shovelfuls of money to the ILEC telcos to upgrade and expand their networks. Unfortunately, there is little in the way of auditing to ensure that's what the money is used for. If a US telco said they were no longer going to invest in their network, I think the government would be justified in demanding a refund of USF and other moneys intended for that purpose. I'm sure that would make it more 'attractive' to upgrade the network.

     

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