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.

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  1. identicon
    Basic Investor, 16 Feb 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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