What Has The FCC Done To Actually Encourage Competition?

from the can't-walk-the-walk dept

For the better part of a decade, we've been arguing that the main problem with broadband in the US, and the main reason we remain so far behind many other countries, is the stunning lack of competition. The broadband field is dominated by just a few players, and they always seem to be consolidating, rather than leading to new competition. In fact, we've seen that when competition decreases, the efforts to expand broadband suddenly seem to go away. Competition drives better broadband. It really is that simple. The FCC has been paying lip service to this idea for years, but has never actually done anything. The latest is that it's launched a Connect2Compete program. Yes, it has the word "compete" in there, but an analysis of the plan shows that it's got absolutely nothing whatsoever to do with actual competition.

Much of the plan is an attempt to reform the absolute boondoggle that is the Universal Service Fund -- a mysterious fund with little oversight that often just seems to end up propping up telcos' bottom lines rather than leading to anything like universal service. Fixing the USF would be a good idea, but apparently the "plan" doesn't look like it'll do anything useful:
The primary thrust of the project involves the agency's plan for USF reform, the specifics of which have yet to be fully disclosed but are believed to be largely pulled from AT&T and Verizon lobbyist recommendations. The FCC's "Connect to Compete" website insists this reform could net "$1 billion or more per year in benefits for wireless consumers alone." However, unmentioned is the fact the plan will likely drive up prices for consumer broadband bills by raising the cap on USF fees charged by carriers above $6.50 per month.

What would consumers get for this money? Digging into the telco's USF plan, there's absolutely nothing there that suggests serious broadband expansion beyond what they'd already planned with upcoming LTE efforts. There's also absolutely nothing to suggest the FCC has a handle on auditing the USF and e-Rate program. $25 billion has been poured into large and small telco coffers over the years (in addition to billions in additional subsidies), and yet somehow our libraries still lack adequate bandwidth.

Readers should be able to conclude where most of this money actually went. Ignored by the FCC and the press is the fact that all the state and federal subsidies doled out to phone companies by now could have easily wired every U.S. home with fiber to the home several times over. AT&T and Verizon should not be getting another penny in government subsidies, yet the FCC's USF reform will almost-certainly involve additional handouts you'll be paying for in the form of higher broadband bills.
So there we are. No effort at increased competition and better broadband. But higher fees going into a boondoggle fund that will almost certainly end up in the coffers of our two largest (and super profitable) telco companies.

Filed Under: broadband, competition, fcc, telcos

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  1. identicon
    Anonymous Coward, 18 Oct 2011 @ 5:45am

    Actually the United States didn't start falling behind other countries in broadband & Internet access/etc until Bush changed the law near the beginning of his two terms. The government used to be in charge of setting this stuff up. Then Bush had I believe it was the FCC change the rules to privatize the whole system and make the ISPs responsible for this.

    Why did the ISPs want this change? Because there was much more money to be made building this stuff themselves and selling it to people without the government being involved. The problem is the ISPs only do what's best for their bottom line, and building new infrastructure is an expensive long term investment, even if it does bring them in much more profits once they do build it.

    In all but like 1 or 2 of the countries ahead of us in High Speed Internet access, the government is in charge of building the high speed internet access for the people. And those 2 countries that also have the ISPs owning everything aren't exactly first world countries either.

    Also, the other thing that is making us fall behind in Broadband access is the massive size of the United States compared to most other countries. We have lots more land then European countries, and a lot of emptier places. This makes creating high speed internet access for everyone much more expensive, which is part of why the capitalist switch has especially not worked out in Rural areas, because to the ISPs it costs too much to install high speed Internet in an area where too few people will use it. Why invest money in something you have very little chance of ever making a profit from?

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