Incumbents Blocking Broadband Stimulus Efforts Because They Don't Like Competition

from the leave-us-alone dept

Back when the $7.2 billion broadband stimulus plan was announced, we were a bit worried that it was really just a bailout plan for incumbent broadband providers. The focus of the plan was on "shovel ready" projects in an attempt to create jobs, and that generally meant incumbent providers who could hire a lot of people. The last thing the government wanted to do in the middle of a recession was help fund an innovative startup that would disrupt a big employer. But there was one interesting aspect of the stimulus package: it suggested that anyone taking the government money would have to share access to infrastructure -- something that makes a lot of sense, if you're encouraging competition.

But, of course, the incumbents don't want competition at all. They've based their entire business models on the very lack of competition in the marketplace. So, it quickly became clear that they would not only resist taking any of the money, but they would actively seek to block upstarts from taking it as well. And... that's exactly what appears to be happening. lavi d points us to the news that lots of smaller companies are applying for the federal funds, and (surprise, surprise) the incumbents are not applying for the funds at all, but are drafting legislation in various local governments to prevent any upstart competitors from getting those funds. So, not only is it not stimulating the creation of jobs, it's not really providing much more broadband or competition.


Reader Comments (rss)

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  1.  
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    The Anti-Mike (profile), Feb 15th, 2010 @ 4:59am

    If the incumbents have to cut jobs (because they lose market share and income), and lower price competitors take over, why would you think it would create net jobs?

     

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  2.  
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    Modplan (profile), Feb 15th, 2010 @ 5:08am

    Re:

    Because the lower price competitors still need people to run their services as they expand and take over the incumbents job, and creates a healthier market for all with a lower priced service meaning less pressure on people and the job market as a whole, especially as new jobs are created through people who can now better afford services for web based businesses.

     

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  3.  
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    David T, Feb 15th, 2010 @ 5:13am

    Re:

    @The Anti-Mike Initially there would be some job disruption as old models are restructured, but competition would develop the market space allowing it to host more jobs in the long haul.

    Regulatory lock in makes it easier to define what you get in a market space in terms of jobs and economic activity (good for gov't planning), but it's invariably less than what the chaotic free market would allow.

     

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  4.  
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    Anonymous Coward, Feb 15th, 2010 @ 5:48am

    Re:

    Because the labor required to install a new service greatly exceeds the labor required to maintain an existing service.

     

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  5.  
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    cwbutler, Feb 15th, 2010 @ 6:04am

    well, they're stimulating lawyers

    lord knows THEY need the money >:)

     

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    Dark Helmet (profile), Feb 15th, 2010 @ 6:07am

    Nonsense...

    "the incumbents are not applying for the funds at all, but are drafting legislation in various local governments to prevent any upstart competitors from getting those funds. So, not only is it not stimulating the creation of jobs..."

    But just THINK of all the paralegals the lawyers and lobbyists drafting that legislation will be hiring! That's NEW work that wouldn't have needed to be done if there were no stimulus legislation to legislate against through legislation....Okay, now I've gone cross-eyed....

     

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  7.  
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    Anonymous Coward, Feb 15th, 2010 @ 6:21am

    Re:

    Not a big fan of economics are you?

     

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  8.  
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    Michial Thompson, Feb 15th, 2010 @ 7:02am

    This is EXACTLY why Google's attempts will fail too

    This is how the Utilities Market works. Unfortunately it is also at a level of government where corruption is rarely recognized nationally. It's also at a level of government where money still talks.

    Upstarts don't have the funds to deal with the corrupt people, and they don't have the funds to compete with the big guys where corruption isn't an issue.

    Utilities such as phone, cable, and internet feed a lot of money back into the city and county budgets. All the incumbant has to do is reduce the money they are willing to give back to the city if the city allows competition in. In the short term that loss of revenue really hurts the city budget, and in the long term competition is good for the citizens but shatters long term revenue for the city and overall the city and the citizens are hurt.

    And since the overall revenue fed back to the city will be less no matter how many competitors they allow in or how many subscribers they gain the city still loses.

     

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  9.  
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    NullOp, Feb 15th, 2010 @ 7:34am

    Solution

    Give all the $ to start-ups a screw the incumbents! I've truly had it with anti-competition in this country. Whatever happened to the "brightest and the best" business model?

     

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    WammerJammer (profile), Feb 15th, 2010 @ 7:40am

    Incumbents Blocking Broadband Stimulus Efforts Because They Don't Like Competition

    Hey I got ComCast and as long as they are the fastest pipe I can get for my business then I will buy it. But when something faster comes I will leave them hanging in the wind. You see I have NO product loyalty anymore. I figure the bigger the company the more restrictive they are. Competition is very real and scares the shit out of big companies. Like I said I get 25MB speed for my internet from Comcast, but if Google rolls out 1GB, screw Comcast.
    To stick to the subject the incumbents really need to worry about the next election in the US. I am personally voting against every incumbent in my district. It's time to put new blood in Washington. It's time to get some politicians who feel indebted to their people rather than being indebted to lobbyists for Insurance companies.

     

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  11.  
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    Michial Thompson, Feb 15th, 2010 @ 7:57am

    Re: Incumbents Blocking Broadband Stimulus Efforts Because They Don't Like Competition

    It really won't matter who you vote for to be totally honest.

    A friend of mine sums it up pretty accurately, no matter how extreme left or right the person you elect are before the election, they are forced into the middle through compromising to get even some of the things they want accomplished.

    Our system is Broken here in the US, but there is no way to really fix the mess we have either. It's a self feeding disaster that is geared only towards self preservation. The only fix would be to totally dismantle the entire mess and start from scratch which hasn't happened since 1776.

    And even that cannot happen because the self serving engine is in control of all the massive firepower too.

    When the founding fathers seperated Church from State they should have also seperated the military from the Church AND the state too.

     

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    chris (profile), Feb 15th, 2010 @ 8:08am

    Re: Re:

    especially as new jobs are created through people who can now better afford services for web based businesses.

    or how about the jobs created by people running those businesses. even if these new "web based businesses" employ only the owner, those owners will still need to buy groceries, pay electric bills, have cars serviced, have packages shipped and delivered, have books books kept, and roofs repaired.

    helping businesses compete, especially small ones, is just about always a net win for the economy.

     

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  13.  
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    Anonymous Coward, Feb 15th, 2010 @ 8:21am

    Re:

    You're assuming they'd have to cut jobs... why?

     

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  14.  
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    Captain Obvious, Feb 15th, 2010 @ 8:33am

    Re: Re: Incumbents Blocking Broadband Stimulus Efforts Because They Don't Like Competition

    There is one way, possibly - secession. Texas and Vermont are already talking about it. And if they go, others will follow one after another like dominoes. After all, who wants to be part of a multi-trillion dollar debt when you can secede and wipe the slate clean?

     

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  15.  
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    Michial Thompson, Feb 15th, 2010 @ 8:58am

    Succession isn't an option

    First off NONE of the 50 states have the right of succession, NOT EVEN Texas. And even if they had the right NONE of the 50 states have the ability to survive on their own.

    Texas signed away it's right of succession in exchange for something a number of years back. I'd need to do research to find out what it was that they did this for. And Texas was the ONLY state with that as an option.

    Economically Texas is the only state with the resources to survive on it's own, and even that is marginal at best, and depends on the population as a whole staying in Texas. If Texas did manage to succeed from the Union a huge amount of it's residence would leave. Most of us aren't born Texans, and while we live here we aren't willing to suffer for a few die hard rednecks.

    There are actually something like 13 states that have succession proceedings going on, and in all cases it's nothing more than a political statement to the US Government that is absolutely toothless.

    These proceedings are about as affective as putting a "Vote for XYZZY" sign in your front yard and adding "or else" to the bottom of the sign.

    The only way that a state is going to withdraw from the Union successfully is going to be through a Civil War, and Americans have been bred to be week and cowardly when it comes to our own Government which works in their favor. And If a state was to grow enough of a backbone to even attempt, no state in the Union has the military resources to fight the US Military even after the small minority of the soldiers willing to stand against orders on principal were removed.

    BUT THERE is hope sorta. I read an article a few years ago that spoke of world powers, and how power is always a balance. In that article it talked about how right now the US is the dominant power, and can sustain that power through military force for about 50-75 years before we develop enough "resistance" to balance the world against us. Once enough countries unite against us the US will be overthrown and a new leader will take it's place.

    It's some cycle that somehow repeats it's self over history and one of the recent examples used was Hitler, and how the world united to overthrow him....

     

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  16.  
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    anti anti mike dances around the street, Feb 15th, 2010 @ 9:08am

    quite the opposite

    if you bring unjust laws to the foreground and ge them exposure you may get them removed
    and this my friends would be as they say the end for those not being google in and for there users.

    this move is a block by greedy old farts who need a bigger golf course and a diamond made golf cart and adamantium golf clubs

     

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  17.  
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    Emo the Libertarian (profile), Feb 15th, 2010 @ 9:47am

    Re:

    Just a reminder to all, if you actually show the facts about how TAM is incorrect he just stops responding.... Let the Facts kill the troll...

     

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  18.  
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    Captain Obvious, Feb 15th, 2010 @ 9:48am

    Re: Succession isn't an option

    The right of secession is written into every state constitution, as I recall. So states can do it. And as far as Texas goes, from what I've read, the governor himself was endorsing the idea. So it's not just a few scattered radicals here and there.

    States' rights were originally intended to be every bit as important and viable as those of the central government, to act as a balance to keep it from getting out of hand. Too bad most states have forgotten that. In some ways we might be better off without a bloated central machine and instead relying on more local governance.

     

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  19.  
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    kirillian (profile), Feb 15th, 2010 @ 10:15am

    Re: Re: Succession isn't an option

    The issue is not so much that a state has the right to secede, but whether or not it will cause the rest of the union to invade and forcibly cause a rejoining as happened in the Civil War. Personally, I don't think secession is viable in most cases because the backlash over the secession from the citizens living in the state could be crippling. Even in Texas (I'm a native) where I think the loyalty to the state over the union is probably the strongest (I have heard that Virginians also have similar loyalty, but I don't know this first-hand), I think there are enough non-natives and city folk that don't have the same sense of loyalty. I think there could be just enough of those to cause in-state civil war in the case of a secession...just my two cents.

     

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  20.  
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    Anonymous Coward, Feb 15th, 2010 @ 10:50am

    Re: Re: Re: Incumbents Blocking Broadband Stimulus Efforts Because They Don't Like Competition

    Apparently, texans are building that fence on the wrong border

     

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  21.  
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    Carole, Feb 15th, 2010 @ 12:41pm

    It worked in the 90s

    Competitve Telecom drove the economy to the highs we so badly miss back in the 90s.

    The problems were -
    Engineers who know how to build systems, but not run a business-

    The Big Boy club that was too hard headed to take advice

    The greedy who were only in to make a quick buck and exit

    Wall Street who crushes customer service and development budgets in favor of quick profits

    David vs Goliath legal departments

    Now, if we could solve all of those problems, it could be our ticket out of the mess we're in - just like it was the last time.

    Even if we can't solve those problems, it could give us a jump start that would last a few years at least before it fell apart.

     

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  22.  
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    Hephaestus (profile), Feb 16th, 2010 @ 7:21am

    Re: This is EXACTLY why Google's attempts will fail too

    Actually google is asking the cities to come to them and thats why googles attempt will work. Also if the Incumbents try to block this imagine the uproar

     

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  23.  
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    Gary Dixon, Feb 16th, 2010 @ 9:00am

    How dare a company try to protect thier market

    Unbelievable that anyone would be surprised that any incumbent should try to protect their market. These incumbents (Comcast, Verizon, Qwest …….) took great gambles by investing in their facilities years ago to provide a virtually unknown service called Broadband. Now all the Johnny- come- lately startups have their hands out for free government money to over build existing services. It is the incumbent’s duty to their stock holders and employees to protect themselves.

    The idea of Broadband Stimulus was not to only put people to work but further develop broadband availability to underserviced/unserviced areas of our great county. Many of the grant/loan request submitted simply do not meet the sustainability requirement so they demand a piece of the incumbent’s service area. That doesn’t do anything for rural America and progress. Ask yourselves do the Chicago suburbs or City of Philadelphia really need another broadband operator. If so the money would be available to them through other means to build plant not the tax payers.

     

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  24.  
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    Basic Investor, Feb 16th, 2010 @ 10:05am

    Re: Competition and Increased Jobs

    Competition equals lower prices. Lower prices means access to more customers and an increase in the addressable market. An increase in customers in conjunction with overlap of coverage by competitors equals a net increase in jobs. As proof I offer the huge increase in telecommunications jobs after the AT&T MFJ in 1984. As the antithesis, I offer the example of consolidation in the industry in the early 2000's that ultimately led to the loss of over 450000 jobs industry wide.

     

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  25.  
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    Concerned Tax Payer, Feb 16th, 2010 @ 12:47pm

    Too much Competition

    But should tax payer money be used to pursue competition?

    I will grant you that the AT&T MFJ seems to have worked admirably but I don’t think you have your facts straight as for the 45,000 jobs lost by consolidation. The telecom market became super heated in 2009, over saturated by competition then reality set. The consolidation was a result of the lack of sustainability by too much competition and naïve investors that pushed it over the cliff. Since then industry corrected itself without government intervention. Granted the fast and rich times of World Comm and Adelphia are but a memory but I think many of those people are still in prison.

     

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  26.  
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    Too much competition, Feb 16th, 2010 @ 1:03pm

    Re: Too much Competition

    My apologies the telecom market broke its back in 1999-2001. Hard to believe it has been 10 years already.

     

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  27.  
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    Dana Raff, Sep 3rd, 2011 @ 9:17pm

    RE

    It is not the incumbents who are the problem. The Broadband stimulus was designed for rural areas, and for areas where broadband does not exist. What actually happened is the stimulus money went to for profit companies to over build areas that already had broadband infrastructure. It also went to private for profit companies to build new monopolies with tax payer dollars. Blaming the incumbents is just a reflection of the person saying that, not being very well informed on the issue

     

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  28.  
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    Dana Raff, Sep 3rd, 2011 @ 9:20pm

    Re: Re:

    Sorry, the companies that received the Broadband stimulus money have no intention of offering lower prices. In fact we should not be using public tax dollars to foster competition. Using public tax dollars like this only causes lost jobs and less service

     

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  29.  
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    Dana Raff, Sep 3rd, 2011 @ 9:24pm

    Re: Succession isn't an option

    Sorry, every state has the right to leave the union. The states created the federal government, and the states can leave anytime they want.

     

    reply to this | link to this | view in thread ]


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