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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.
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Filed Under: broadband, competition, fcc, telcos

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  1. identicon
    Anonymous Coward, 18 Oct 2011 @ 2:44am

    This is one of the rare instances that I really believe that government ownership of the infra-structure would have been better.

    If they don't want to do that all they need to build is the IXP between cities and let people wire their neighbourhoods where they will own the fiber and hire managers for the services they need.

    Or something along those lines because with just a handful of actors in that market and the cost of building up a network from scratch on the billions no one is going to do unless you are one of those companies that have billions to spare.

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

  2. identicon
    Anonymous Coward, 18 Oct 2011 @ 3:11am

    The FCC I don't know but I do believe the American government doesn't like free at all.

    http://www.multichannel.com/article/475391-Free_TV_Coalition_Says_Broadcaster_Broadband_Coul d_Deliver_400B_To_Treasury.php

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

  3. identicon
    Anonymous Coward, 18 Oct 2011 @ 3:26am

    In a joint letter, Comcast, Time Warner Cable, Disney, DirecTV, HBO, AT&T and Verizon -- all of whom had representatives at the workshop -- said that they do not believe the alliance proposal is clearly feasible or that it could or should be the basis of any FCC rulemaking.
    In their letter, the companies also argue that rather than add new requirements to the FCC's rules promoting the commercial availability of navigation devices (cable set-tops), a "strong case" could be made for sunsetting the rules (Sec. 629 of the Communications Act) altogether.

    It pointed out the Obama Administration's call for regulatory reform based in costs and burdens on consumers and business. By contrast, a notice of proposed rulemaking on AllVid would "signal that yet another regulatory 'solution' may be imposed on what is the most competitive device, programming, and services marketplace this nation has ever enjoyed....We respectfully request that the Commission allow such entrepreneurial activity to continue without the specter that it will ultimately be undermined by yet another ill-fated government-imposed technology mandate."

    Source: http://www.multichannel.com/article/475389-Comcast_Time_Warner_Cable_AllVid_NPRM_Still_Not_Necessary .php

    Those companies don't want to change they want their gravy train going, without any regulations to stop them from fleecing the public, they say they are the most competitive market the nation has ever had, if that can't be true I don't remember in the 70's and 80's the price of cable being so high or the services so poor.

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

  4. identicon
    Anonymous Coward, 18 Oct 2011 @ 3:29am

    They love MVPD and don't want to let that go, it doesn't matter that it cost more to the public.

    They also only enact change when pushed hard, and when the government forget about it they will start doing the same things they have been doing before and that is screw the customers again.

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

  5. icon
    surfer (profile), 18 Oct 2011 @ 3:48am

    sounds like they are competing for the USF funds.

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

  6. identicon
    Aerilus, 18 Oct 2011 @ 4:07am

    give the money to sonic.net or some other small start-ups problem solved.

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

  7. identicon
    Anonymous Coward, 18 Oct 2011 @ 4:52am


    I don't defend the telco's but I don't buy the highest prices and poor service bit.

    Adjusted for inflation the most standard packages are probably pretty close to what you paid in the 70's and 80's, internet didn't exist so you can't really compare that service, and last time I checked I had a few more channels than I did back then, and I seldom have an outage.

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

  8. identicon
    Anonymous Coward, 18 Oct 2011 @ 5:03am

    "What Has The FCC Done To Actually Encourage Competition?"

    Pass anti-competitive laws!

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

  9. 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?

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

  10. identicon
    Anonymous Coward, 18 Oct 2011 @ 6:00am

    Re: Re:

    Are you sure?


    Some people found out that they could get 60% discount on their bill just by the threatening to cancel, just 4 years ago.

    Also I find it hard to believe that people who paid 5$ dollars in the 70's are paying the same thing today.

    Here you have more channels that means you have to pay more and you won't be watching them all but you pay them anyway.

    The funny part, content producers don't let you pay cents to them because it devalues the value of the property LoL


    http://data.bls .gov/cgi-bin/cpicalc.pl?cost1=5.00&year1=1970&year2=2011

    how much are they charging for PPV again?
    Oh that is right, some idiot thought $60 is the right price :)

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

  11. identicon
    Anonymous Coward, 18 Oct 2011 @ 6:03am


    The US even in high density areas is far behind others, the size of it may influence some parts but surely not the most profitable ones.

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

  12. identicon
    Anonymous Coward, 18 Oct 2011 @ 6:36am

    So the telcos give out all their user info whenever the government asks for it and the telcis get money from the Universal Slush Fund

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

  13. icon
    That Anonymous Coward (profile), 18 Oct 2011 @ 6:04pm

    So to answer the headline - Nothing.

    Like many of the "good ideas" we have in creating laws and structure, the implementation is often hollow.

    But in a country where no one has any outrage that several types of deadly bacteria have no law punishing the corporations that ship food contaminated with them is this surprising?

    We have to ask permission to try and recall dangerous products that could kill consumers if used properly.
    Think about that for a moment. Why should damage to company image trump public safety? But it does.
    The tainted peanut butter problem we had recently, the one factory failed FOR YEARS but we refuse to actually fund the people who are supposed to keep the food supply safe. And then they opened another factory and never told anyone so it was never inspected.

    Why would the FCC do anything for the public good? They make noises about it and Congress threatened to gut them to protect their corporate benefactors. We don't demand any better, why would we expect it?

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

  14. identicon
    Anonymous Coward, 18 Oct 2011 @ 6:31pm

    It's all how you analyze the data. I'm sure when we're sporting a whopping 20Mbps national avg and the rest of the developed world is 100+Mbps 10 years from now, we'll show them all why we're still number one in broadband!

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

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