Broadband

by Karl Bode


Filed Under:
ajit pai, broadband, competition, fcc



Groups Battle Trump FCC's Claim That One ISP In A Market Means There's Effective Competition

from the the-fix-is-in dept

While the lack of competition in residential broadband gets plenty of well-deserved attention, the business broadband market in the United States may be even worse. Just one of three companies (Verizon, AT&T, or CenturyLink) dominate what's dubbed the business data services (BDS) market, which connects everything from cellular towers to ATMs to the broader internet. According to the FCC's own data (pdf), 73% of the special access market is controlled by one ISP, 24% of markets usually "enjoy" duopoly control, and only a tiny fraction of markets have more than two choices of BDS providers.

This essential monopoly or duopoly allows these companies to overcharge numerous retailers and organizations for connectivity, and the regulatory capture in the telecom market means countless politicians work tirelessly to keep things that way. Case in point: back in April Trump's FCC announced it would not only be scrapping previous plans to try and make this market more competitive, but would be fiddling with data to try and distort the very definition of "competition." Under the FCC's new plan, countless markets will now be deemed "competitive" if businesses have access to just one broadband provider:

"Pai's definition of "sufficient competition" has drawn fire. The plan would treat an entire county as competitive "if 50 percent of the locations with BDS demand in that county are within a half mile of a location served by a competitive provider." A county would also be considered competitive if 75 percent of Census blocks in the county have a cable provider."

Distorting data and lowering the bar to ankle height to "solve" a lack of competition is part and parcel for Ajit Pai's FCC, which is also trying to weaken the definition of competition in the residential sector as well. Again, if you distort the data to make it look like the market is functioning perfectly, it's easier to justify your complete and total apathy to what -- if you've spent any time with Comcast -- is pretty clearly a broken market.

Needless to say, consumer advocates and the smaller companies harmed by these policies aren't particularly pleased with the FCC's recent decisions. They've been trying for the better part of a decade to fix the lack of competition in the special access and BDS markets, and were just on the cusp of making progress when the FCC dramatically changed course post-election. According to research by the Consumer Federation of America (CFA), roughly half of the $40 billion in revenue made in this market is courtesy of a lack of competition and monopoly over-charging of smaller businesses.

As a result, Public Knowledge and the Consumer Federation of America have filed an amicus curiae brief (pdf) urging the US Court of Appeals for the Eighth Circuit to vacate the FCC's BDS order. The filing argues that the FCC's actions here run in stark contrast to both FCC precedent and, you know, reality:

"The Court should vacate and remand the Order. The Order is arbitrary and capricious. The Commission departed from its past precedents without explanation or justification, and reached a conclusion that is contrary to the record in the Business Data Services docket. Further, the Order concludes, contrary to the record and established antitrust analysis, that duopoly markets are sufficiently competitive to discipline market power and prices, and that potential competition can effectively check market power, even by monopoly service providers."

Of course there's a reason giant ISPs like Comcast and AT&T employ an army of economists eager to distort, stretch, and otherwise mutilate data until it justifies policy that protects them from real competition. In fact, the groups at one point indicate that Ajit Pai's FCC tried to use concrete to justify its latest effort:

"The order cites studies analyzing three-firm and four-firm markets, but fails to explain how its analysis is relevant to the one-firm and two-firm markets the commission embraces as sufficiently competitive, Curiously, the Commission relies on a study involving ready-mix concrete for the proposition that the addition of competitors beyond a second has diminishing returns..."

There's numerous other slights of hand the FCC used to justify its total apathy to the broken BDS market, including claiming that wireless competition from fifth-generation (5G) networks will make everything magically work out -- while ignoring that just two companies (AT&T and Verizon) hold the vast majority of the spectrum needed to compete in that space. Granted if you've watched as the FCC abuses logic to justify dismantling everything from net neutrality to privacy protections, it's all par for the course for an agency that prioritizes incumbent revenues over consumers, competition, or the health of the market itself.


Reader Comments

Subscribe: RSS

View by: Time | Thread


  • identicon
    Anonymous Coward, 12 Oct 2017 @ 7:06am

    "Granted if you've watched as the FCC abuses logic to justify dismantling everything from net neutrality to privacy protections, it's all par for the course for an agency that prioritizes incumbent revenues over consumers, competition, or the health of the market itself."

    Ha ha haaaaa! I LOVE IT! You are being eaten by the beast you raised and loved!

    Reap what you sow... comes to mind here.

    Trash the FCC, goto the FTC and tell it to enforce anti-trust & anti-monopoly laws or get file 13'd as well.

    Better to start a new agency to send a lesson.

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

    • identicon
      Anonymous Coward, 12 Oct 2017 @ 7:35am

      Re:

      "You are being eaten by the beast you raised and loved!"

      Trump voters rejoice!

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

    • identicon
      Anonymous Coward, 12 Oct 2017 @ 8:06am

      Re:

      I fail to see your point, good sir.

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

      • identicon
        Anonymous Coward, 12 Oct 2017 @ 9:41am

        Re: Re:

        The point is that you cannot rely on government agency to look after your best interests. Things that you need to be doing for yourself should not be something they are able to regulate or interfere with.

        We should be able to select which ISP's we would like to use and to not allow them to develop monopolies. Especially in the way that the FCC has not only allowed, but has blessed since the first day of it's inception nearly a century ago.

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

        • identicon
          Anonymous Coward, 12 Oct 2017 @ 9:54am

          Re: Re: Re:

          An interesting point. I agree that choice in ISP's is a good thing.

          However, I'm having trouble understanding how individuals, without a government regulatory agency, would accomplish this.

          History has proven that corporations, left to their own devices, will inevitably engage in anti-competitive/anti-consumer behavior. That's how we ended up with the FTC and anti-trust laws. There is little that individuals can do to stop it.

          If you have viable ideas as how to accomplish this, I would be very interested to hear them.

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

          • identicon
            Anonymous Coward, 12 Oct 2017 @ 10:19am

            Re: Re: Re: Re:

            If you have viable ideas as how to accomplish this, I would be very interested to hear them.

            Nukes.

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

          • identicon
            Anonymous Coward, 12 Oct 2017 @ 10:25am

            Re: Re: Re: Re:

            "However, I'm having trouble understanding how individuals, without a government regulatory agency, would accomplish this."

            You make all sorts of choices everyday without a government regulatory agency on things like which grocery store you want to buy food from, this is not regulated. The only things being regulated is "quality" and "zoning laws" so that Walmart can't buy 10 houses on your street doze them and build a store causing traffic on your block the roads were not designed to handle.

            "History has proven that corporations, left to their own devices, will inevitably engage in anti-competitive/anti-consumer behavior."

            Well yes, that is just human nature... the desire to own and control EVERYTHING! So regulations need to only focus on those and very little of anything else.

            "That's how we ended up with the FTC and anti-trust laws. There is little that individuals can do to stop it."

            You mean little that an "individual" can do. A lot of individuals can do a whole lot, like stop giving them money. This is the same classic con of collective bargaining rights for unions. The idea is always to have a power structure created to ensure that people follow the rules. As individuals we all wimp out and refuse to help each other out of fear even when we are making the problem worse.

            "If you have viable ideas as how to accomplish this, I would be very interested to hear them."

            There are actually multiple ways but here is are my favorites.

            #1. All buried conduits and poles participating in the primary part of infrastructure becomes public property. In other words, government regulated property. Businesses can only own the wires themselves, but if they become unused, wire must become public property for the next business to use, and no one is allowed to dig up any wire and return it to stock unless they are replacing it with upgraded wires.

            #2. Create regulation that prevents States & Local City Councils from creating any exclusive contracts with any ISP. Yes, even the cities/governments themselves are directly involved in the creation of these monopolies.

            #3. The last miles can either be fully public property or some form of easement type of arrangements or fully owned by property owners where the lines terminate outside of ISP communications stations. This here is the primary prevention of a natural monopoly developing. Under no circumstance should any business own or control any portion of the last mile.

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

        • identicon
          Anonymous Coward, 12 Oct 2017 @ 10:00am

          Re: Re: Re:

          Duplicating the infrastructure is the most expensive way of providing service, never mind the mess of poles and wires that result. Regulations to force sharing of infrastructure work reasonably well in Europe and other places.

          Making the heads of government agencies political appointees, rather than permanent civil servants, is a root cause of much regulatory capture, the appointees are looking for a future job with the same companies that are making political donations.

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

          • identicon
            Anonymous Coward, 12 Oct 2017 @ 10:28am

            Re: Re: Re: Re:

            "Regulations to force sharing of infrastructure work reasonably well in Europe and other places."

            This is the kind of regulation I do support.

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

            • identicon
              Anonymous Coward, 12 Oct 2017 @ 12:05pm

              Re: Re: Re: Re: Re:

              From an earlier comment:

              The point is that you cannot rely on government agency to look after your best interests.

              But regulation, even of the kind you favor, requires a government agency to enforce it. Therefore your real objection is not the existence of the FCC, but what regulations it enforces, and it freedom, or lack of to change those regulations.

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

  • icon
    ShadowNinja (profile), 12 Oct 2017 @ 7:20am

    > According to research by the Consumer Federation of America (CFA), roughly half of the $40 billion in revenue made in this market is courtesy of a lack of competition and monopoly over-charging of smaller businesses.

    Stuff like this are why I've been saying for years that Wall Street are very short sighted in hating FIOS and other ISP infrastructure investments. They're undermining the entire US economy long term (and their own investments) just so that a few greedy people who own ISP stock in Verizon, AT&T, Comcast, etc. can make more money in the short term from lack of competition and lack of proper investment in infrastructure.

    It would be like all the drug companies in the world deciding they don't need a Research and Development department, because they can just jack up the prices on all the drugs they already sell to make more money. They'd make big money in the short term with their greatly reduced expenses, but at the expense of everyone else with their jacked up prices. And long term we'd all be screwed from the lack of investment in medical research.

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

  • identicon
    Baron von Robber, 12 Oct 2017 @ 7:58am

    Now give Trump a break. 1 is the highest he can count to.

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

  • identicon
    Anonymous Coward, 12 Oct 2017 @ 8:10am

    What I want to know is where the h*** is Jessica Rosenworcel throughout all of this? Every time Wheeler so much as uttered his name, Pai was right there shouting from the rooftops how wrong Wheeler is about every little thing. Where's the voice of dissent in all these things Pai is doing?
    Dear Jessica, Wake the f*** up and do your job!

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

  • identicon
    James Burkhardt, 12 Oct 2017 @ 8:25am

    It’s really weird how Pai is defending this move. He will talk about how price controls would prevent competition from entering a market because the competitors can’t charge higher prices. So he admits that competition wouldn’t lower prices. and then he claims that by deregulating, competition would enter the market and lower prices, after having just admitted that competition won’t enter the market if they had to lower prices. Which is it?

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

  • identicon
    Anonymous Coward, 12 Oct 2017 @ 8:34am

    State Actors

    The government treats these giant ISPs as if they are extensions of themselves, granting them monopoly status in return for unfettered access to their data. We the supposed customers have our data declared 3rd party and free game for any and every agency that wants to go through it in the hopes of finding something that they can charge you for, or get blackmail information on you so they can use it against you if you ever displease them.

    Welcome to the 2017 that 1984 wished it could be.

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

  • identicon
    Anonymous Coward, 12 Oct 2017 @ 8:45am

    claiming that wireless competition from fifth-generation (5G) networks will make everything magically work out -- while ignoring that just two companies (AT&T and Verizon) hold the vast majority of the spectrum needed to compete in that space.

    And there's no sign that they're planning to compete with "real" broadband. 4G networks have extremely restrictive caps compared to proper connections; I've even seen prepaid plans measuring in megabytes, like we're in the 1980's again.

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

  • icon
    K`Tetch (profile), 12 Oct 2017 @ 9:44am

    When this first came out a month or two back, I thought of the county I used to live in (Jasper County, GA, best known as the location My Cousin Vinny was shot in).

    I did a 'back of the envelope' calculation for there, and I think I came up with a rough number for that thousand square kilometre county near I20 and inside the Atlanta metro area.

    Three single installations were all I think they needed to make that county 'competitive'. I know it could be done with 5 quite easily. And that's a problem for a rural district because BDS requiring entities tend to clump together, so a half mile radius covers most of them, so that means that rural areas actually make out even worse than urban ones more likely to be better served.

    I plan on sitting down with a good map of the county and some 1/2 mile radius circles to place on it soon.

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

  • identicon
    Personanongrata, 12 Oct 2017 @ 12:28pm

    Stupid is as FCC Does

    Groups Battle Trump FCC's Claim That One ISP In A Market Means There's Effective Competition

    FCC's Claim That One ISP In A Market Means There's Effective Competition is a true statement if you live your life with your head stuck up your arse.

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

  • icon
    MyNameHere (profile), 12 Oct 2017 @ 5:42pm

    What I find interesting here is that this isn't as significant a step as reclassifying an entire industry to Title II (without an act of congress) or imposing net neutrality rules (again, without an act of congress). You cheered when they randomly raised the definition of broadband by over 600%.

    By your own standards, these are things that are within the prerogative of the head of the FCC. He is doing his job, you just don't like his answers.

    Half a mile is a reasonable benchmark. In real world distances, that would be 10 to 15 telephone poles apart. Under normal circumstances, a phone or cable company would be able to obtain rights and bring service if there was demand.

    Further, half a mile is a reasonable distance for a short distance radio link or repeater, or even point to point (directional antenna) wi-fi link. There are many ways to bring broadband over the last mile, and certainly the last HALF mile.

    You have to accept that not everything the FCC does within it's mandate will please you. The previous chairman randomly and without consultation moved the goal posts significantly, pretty much right off the playing field. You shouldn't be upset when the current one decides that it was a little too extreme and claws them back to the field of play.

    Have a problem? Ask congress to do something. Wyden appears to have plenty of spare time to whip up unpassable legislation, ask him!

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

    • identicon
      Anonymous Coward, 13 Oct 2017 @ 9:15am

      Re:

      My god, you are such a complete industry apologist that it boggles the mind. Everything you say is just dripping with dishonesty. But I'll give you this much, you do say it politely. Having said that, if you're force feeding me a shit sandwich, I really don't care if the table cloth is made of silk. Would you mind very much leaving Techdirt and taking an extended stay in hell?

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

    • identicon
      Anonymous Coward, 13 Oct 2017 @ 10:32pm

      Re:

      How's that Pai-flavored anus taste?

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

  • identicon
    Anonymous Coward, 13 Oct 2017 @ 1:39am

    Further, half a mile is a reasonable distance for a short distance radio link or repeater, or even point to point (directional antenna) wi-fi link. There are many ways to bring broadband over the last mile, and certainly the last HALF mile.

    The 'last mile' is a figure of speech, and in rural areas can tens of miles to the nearest exchange. Further that last mile is only useful if it is connected to the rest of the Internet, and whoever controls that connection controls the 'last mile'.

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

    • icon
      MyNameHere (profile), 13 Oct 2017 @ 4:46am

      Re:

      I understand that. The last mile is just a term - and I wasn't trying to imply that the half a mile the FCC is referencing is related in terms of distance.

      The point of course is that a half a mile isn't a long run, and could be accomplished in more than one way. It's reasonable (IMHO) for someone within that half mile to be considered able to get service.

      Tens of miles would be different, and the FCC isn't suggest that at all.

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

      • identicon
        Anonymous Coward, 13 Oct 2017 @ 10:07am

        Re: Re:

        For customers to get service, there has to be capacity from the nearest network node, with its routers, for them to get service, and achieving that may need more back haul to that node, and more copper or fiber out to the pole where they can be connected.
        Also, given the way the US telcos are treating their infrastructure, there may be no service at all at the nearest pole because they have not replaced or a damaged cabinet, or the lines to that cabinet after storm or other damage.

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

  • identicon
    Anonymous Coward, 13 Oct 2017 @ 8:47am

    One ISP to rule them all

    Soon nothing can hide from their piercing eye and everything will be just fine. Honest.

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


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Use markdown for basic formatting. HTML is no longer supported.
  Save me a cookie
Follow Techdirt
Techdirt Gear
Show Now: Takedown
Advertisement
Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Advertisement
Report this ad  |  Hide Techdirt ads
Recent Stories
Advertisement
Report this ad  |  Hide Techdirt ads

Close

Email This

This feature is only available to registered users. Register or sign in to use it.