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Letting The Market Choose Decent Broadband
An Anonymous Coward pointed out this piece on the regulation (and more to the point deregulation) of broadband Internet service. The article takes the viewpoint that solutions possible by relying on "the human spirit of innovation and creativity" are a better antidote than most of the broadband reforms so far proposed by politicians on behalf of lobbying groups. The author takes a stance some people may consider unrealistically optimistic, but makes some good points about the effects of arbitary deregulation.
Any company who offers both connectivity and other services has an inherent conflict of interest. Moving ownership of the last mile to a separate company which only supplies connectivity removes this conflict of interest.
bull.
there's no mention of NASA and a space program in the constitution either. in fact, you'll find nothing about WANs, broadband, or even personal computers. the people who wrote it were NOT perfect (see 3/5s compromise), and even though it's excellently thought through, the original writers could not see the future, either. they even anticipated that it wouldn't be perfect or complete, and left a framework for creating new laws, and extrapolating the constitution to cover anything they missed. it involves the supreme court, and the legislative branch. legislative branch can make ANY law they want. they can prohibit left handed people from going to the bathroom under penalty of death. the balance is that it must pass constitutional muster in the eyes of the supreme court, which would look at the constitution, and strike down the law. if the legislative branch hates this so much, they can CHANGE the constitution, and the supreme court would have to analyze the new law in that light.
anyway, i'm sure you're aware of all this. but it's suprising then that you consider the absence of permission in the verbage of the constitution is implied prohibition. do a search of strict vs. loose interpretationalists on google, and i'm sure that you'll get something on the long standing philosophical differences between the 2 schools of thought (original bank of the united states provides a nice example of this conflict)
A: None. The Universe spins the bulb, and the Zen master merely stays out of the way.
This piece pretty much ignores the fact that in most states DSL services were already pretty much unregulated which is what allowed the babybells to run roughshod over Covad, Northpoint and Rhythms. There is simply no consumer recourse for being hosed over by the telco on data services once you cross into the realm of the unregulated services. Sticking to T1s and ISDN at least holds things in the realm of tariffed and therefore state regulated services. This has to date been the only reason that these services haven't been totally consumed by the telcos as DSL has been.
The consumer has already spoken in the marketplace only to find their DSL providers driven into bankruptcy at least in part due to predatory practices by the telcos. Predatory monopolies are bad, mkay.
From the Libertarian tract (which some may call the article):
The politicians are missing something in their proposals: faith in the human spirit of innovation and creativity. Where there is a demand the market tends to supply.
Tendency is all well and good ... except when you live in an area
where the you wind up either ponying up a lot of money or do without.
Our family was living in a rural area where the only residential high
speed internet options were ISDN at $120/month or some sort of of
dedicated line (the telco wasn't clear on this) at $400/month. One
other option was one way cable modem; upstream used a modem. DSL
service was not available.
Now we live in a major metro area. Not only is DSL available, we have ... well, did ... have a choice of DSL providers. We orginally
signed up with Flashcom which was an ISP using NorthPoint networks.
NorthPoint and Flashcom parted ways so we got transfered to Telocity
(with a rate increase and change of email address). Then we all know
what happened to NorthPoint. Our service was disconnected for about
two months before Verizon (nee ATT&T/Bell Atlantic) became our
network provider. Then Telocity was bought out by Direct TV which is
now it seems going to be bought out by either Murdoc's News Corp or
EchoStar.
We've been DSL customers for less than one year. Without lifting a finger we've bcome subject to the whims of five different coporations. Excuse me if I'm less than thrilled with the power of the market.
The best way to foster this type of innovation is to get the government out and let the free market work its magic.
Sorry, but I don't believe in magic. It's difficult to tell before hand whether regulation will help or hinder in any given situation. I have no reason to believe that the author's crystal ball is better than my raisin bran reading.
Weakening the property rights of existing networks and requiring them to share their systems with competitors will quash innovation.
Unsupported assertion. It may or may not. Just as nature abhors a vacuum, business craves monoply.
"Where's my other sock?" - A. Einstein
...ISPs stop bundling services that people don't want don't need to offset higher costs.
If I want a webhost, then I can contract for the best webhosting provider. My ISP shouldn't matter. Right now I have four, count them four, webspaces that I am basically being taxed for by my various ISPs, but would never dare use because I have zero faith in their reliability. I'm paying for news servers that have speed-limited connections and don't carry any binaries groups. I'm paying for seven e-mail accounts that i have to throw away if I ever change ISPs, get filled with spam on a regular basis, and are POP3 only.
Why is my $40/50 going towards crap like this? I don't want any of it. I understand that the ISP is a cutthroat business but to me it still constitutes illegal bundling of services.
I want a basic IP dialtone. I think it should be provided as infrastructure by local government. It makes no sense to have four providers of high speed internet service running four lines to every neighborhood when for the same piece the city could run fiber and then lease it to any ISP that wanted to offer service. I am willing to see my taxes go towards that.
As far as webhosting/e-mail/etc I will run those myself. For anything I lack the experience to run, I'll sign up on my own. Everything is a la carte, that is the best way to foster competition and a healthy selection of services in a market where everyone pays based on their actual use of shared resources.
- JoeShmoe
-- I wonder which will go down in history as the bigger failure: the War on Drugs or the War on Filesharing
"The best way to foster this type of innovation is to get the government out and let the free market work its magic."
... the free market and its magic. Now we have an OS that costs more than a new hard drive. I happen to get my dsl here in the states from a baby bell (bellsouth), because they make it 'easy' for you to get it from them, and hard to get it from their competitors. The result - cheap service, horrible support (i refuse to legitimize it by using the word technical, because they are about as technical as my grandmother, who is afraid of email), lots of gratuitous outages, no static ip, and lots of technical errors (I am going to change over, which, again, bs makes overly complex and difficult). My point is that when a single powerful entity that is funded from another source (in this case telephone revenue) where they have a stranglehold on the transportation medium, the free market fails. The service does not get better through competition.
Well look at what happened in the OS market with microsoft
-CrackElf
"Blake is an idealist, Jenna. He cannot afford to think." - Kerr Avon, Star One, Blakes 7
Does anyone else find it sadly amusing that the world's biggest monopolist is whining about the limiting effects about other big monopolies? However the fact that Bill Gates is finally admitting that monopolies do indeed hinder the high-tech economy is a step in the right direction. :)
But guess what? Now that the Baby Bells have nearly killed all their DSL competition, and raised their rates, they are now targetting the independent ISPs! "ISPs in California are accusing SBC Communications of trying to run them out of the broadband business." See this article at techtv.com.
So the ISP's are next, and they may go down just like the CLEC's did. Unless the Justice Department steps in and breaks up the Baby Bell monopolies. Knowing how long this takes, it makes me wonder if the independent ISPs will survive.
Then Later...
And thats when the strong animals become huge multinational monopolistic corporations...
Anonymous posts are filtered.
If anything I fully expect my DSL to cost nearly $60 a month within 2 years.
So what?
Is it really that horrible a thought that we might all have to pay 1/16th of the cost of a T1 for T1 speeds?
Everybody wants legislators to impose restrictions on the behavior of other people that they wouldn't tolerate if imposed on themselves.
If it cost you $2 in materials and time to bake a pie, and you held a pie sale, would you tolerate the government requiring you to charge no more than $2.25 for the pie?
It's not like broadband is a right or a necessity; it's a luxury, and one that's expensive to provide. But we're all demanding better service and lower prices. High speed, good service, low price; pick at most two, folks, you can't have all three.
And since the DSL marketplace is precisely the sort of marketplace that is manipulated by politicians and hurge multinational monopolistic corporations, what say you now?
The free market is great for the telcos -- they get to violate the law and screw the consumer, paying piddling fines along the way, until all their competition is crushed and we are forced back into their arms. Yup, just the way I like my free market to operate!
My solution? Not sure. How about fines with bite for a start so that when telcos break the law in their thuggish manner they get discouraged from doing it a second time by the fine?
________________
Private Essayist
The current US DSL regulatory structure sucks for a number of reasons. But they're not the ones that sophomore mentioned.
By the way, there is no money is residential phone service. Hence, no competition, but there is some competition for business phone service (local and long distance).
Is it really that horrible a thought that we might all have to pay 1/16th of the cost of a T1 for T1 speeds?
It is when there is no justified reason for doing so other than to prevent T1 sales from being destroyed by a cheaper alternative. DSL prices don't have to be so high, they're only high because the telephones are a local monopoly and don't want the more profitable T1 sales to be hurt.
I'm amazed that /. wastes its front page space pointing to junk like this. It's just some undergraduate practicing his P.R. flak skills by rewriting some tired Bell company propaganda, washed liberally with conservative ideology.
But where's the free market when the Bells (and ohter ILECs) were granted their monopolies, which prevented anybody else, until 1996, from putting in competing facilities at all?
But where's the free market for "innovation" when the "wireless" options cited by the college kid author are, indeed, virtually nonexistent, under a government spectrum policy (remember, the airwaves are REGULATED) that is now aimed at maximizing license auction revenues? That results in high cost-per-bit cellular clones and ever-more-concentrated commercial broadcast groups. Wireless unlicensed options are very limited, by design. Satellite is limited by both spectrum availablity and the speed of light -- "innovation" isn't going to change the value of c.
Where's the free market when an incumbent monopolist is allowed to use their monopoly power (the stuff John D Rockefeller was notorious for) to crush any competition? Where's the free market when the Bell companies use every trick in the book to prevent living up to their legal obligations?
There are, of course, two different views of "free market". One is that the government shouldn't interfere with monopolies. The other is that the government has to limit monopoly power in order to let market forces work. Clearly the undergrad author is in the former camp, the "let's bend over and let the monopolies rule us" camp.
I tried to get DSL, from the local baby bell even, for months. They never came out and told me "you are just too far from the CO". It was always, "we need to send a technician out, to see if there are any problems with your line. You'll need to be at home, in case you need to unplug phones." Finally, I had to go to DSL Reports to get the real scoop - I was borderline, and probably wouldn't like it if I got it.
So, I decided to try cable. The NEXT DAY they were at my house installing it, ignoring their own contract to install it in an inside wall, going through the attic. This was a snow day too, that many decided was too bad to go into work. I've had two outages since then, and I'm a very happy customer. That's Cox Cable of Tulsa, BTW.
I can see what they are doing, though. The Bell is dragging it's feet, while Cox is agressivly upgrading it's equipment, partially with Cable Modem subscriber's money. Soon, they will be the only game in town, and then, if they can do it, they'll offer phone over cable for a similar rate. If it was cheaper, I may have to go that way, or take the plunge, drop my land line altogether, and get a cell phone.
And that's why I'm a suppporter of deregulation - not because I think the slow-as-molassas Bell will suddenly pull themselves into the 21st Century, but because the evil merging cable companies should get a shot at the telephone market in a few years. Now THAT would be some true competition.
Well, no, your history is wrong. Perhaps you're so young that you're confusing Canada with Cuba?
Canadian telephone service wasn't a Crown Corporation (like, say, British Telecom's forebears). Bell Canada was once affiliated with AT&T, though spun off some decades ago. Several western provinces owned their own telcos. And some mom'n'pop independents still exist in parts of ON and QC.
Broadband's easier in Canada in part because there's less sprawl. It's a big country but there's a clear city/country break. ADSL doesn't work more than around 15,000 wire feet from the DSLAM (in the CO). Canada's population is largely clustered in cities and towns; large-lot-zoned suburbs (which create long loops) don't rule as they do in much of the USA. So average loop lengths are under control, and you can reach half of the country's population within reasonable range of a hundred COs or so.
Monopolies don't help. Unregulated monopolies really don't help!
How long does it take PacHell to setup DSL as opposed to another company, that must wait on PacHell? Or, @home blocking port 80 because some people are stupid enough to run Windows servers, but not unblocking.
Since the wires are already in place, the playing field is not level.
Fight Spammers!
Internet access a necessity? Time to get a reality check.... All of these complaints about market forces and deregulation miss the biggest point: If you don't like the service choices, start your own company. If the economics of it makes that impossible, {huzza!} maybe THAT is why no one can compete. Hmmm....
DSL like its ISDN ancestor are simply bullshit smokescreens that Bells pretend to offer so that they can claim unfair advantage of OTHERS in order to get rate protection. Don't you get it? Bells have no serious intention of offering broadband because they make too much money from low bandwidth analog phone lines. If they dick around for a 10 years or so putting up some fake DSL then they can claim that the reason it's all so hosed is because of the evil CLECs, ILX's and cable companies getting some bogus unfair advantage. Ergo the Bells, since they are the corporate underwriters of many Congresspersons, get to pressure their legislative suppliers with better rates and terms.
Once a company becomes a monopoly, they use their power to wipe out the playing field. They do this by failing to provide services to small competitors, or by giving away free products that competitors are charging money for. They know this is anti-competitive when the perform these actions. They know that the end result could be litigation and end in regulation. But the decisions are made, knowing full well that regulation would come only after a couple years in the courts. In the mean time, the monopoly is flourishing, the execs are making a fortune by patting themselves on the backs with bonuses, and if it comes down to being dragged into court and it looks as though the money may stop rolling in, the execs resign. The people that made the decisions got rich, and they're going to keep the money, so what do they care?
The only way to stop this kind of behavior is to provide a fast way of monopolistic evaluation and possible regulation. If the execs knew that they wouldn't have time to screw everybody over for their own personal benefit, then they most likely wouldn't. Personally, I'd like to see regulation over any behavior involving a monopoly. A government official that works onsite, that can immediately ask the question "Why's it taking so long to respond to your competitors request", would be a good thing.
Of course, that's just my opinion, I could be right.
If I have a used car with a blue book value of $2,000, and you want to purchase it, and I refuse to sell it for less than $3,000, have I done something wrong? No; it's my damn property, and you're free to not buy it.
However, if you're a car dealer, and your cars are 50% more expensive than the cars from the dealer across the street, you will soon find yourself out of business. The situation the telcos are in now is that they have legislation saying every car dealer in town has to buy cars from them, at whatever prices they set.
It's a trade off, like everything else. No-one wants their street dug up every week by dozens of different phone, gas, electricity or cable companies, so we give one company a limited monopoly as a "reward" for putting in one set of infrastructure. Yes it's their copper. Yes, they paid to put it in. No, they can't charge whatever they want to use it, because that wasn't part of the deal.
--
E_NOSIG
But, in the end, I don't see any other way - regulation won't work. The unionized telco workers with mgmt blessing delay DSL orders for CLECs into oblivion - hell, even if you get DSL FORM the telco it can take weeks and tons of hassles - it shouldn't be this complex. No regulation will change this. Unfortunately, we are unlikely to ever see serious DSL competition - same thing applies to cable modems. The only reason cable modems blew ahead of DSL is the cable companies planned their deployment and save for network bottlenecks which got worked out, they've executed. The telcos are still driving blind.
As much as I hate monopolies (*cough*Micro$oft*cough*), in this case I doubt there are other feasible options. Competing techs (Satellite, wireless, etc) are to immature and cost too much.
Thie ONLY saving grace is cross technology competition. The only thing keeping cable modem prices down is DSL - If DLS disappears, all you cable modem user can rest assured your rates will go up FASTER than your normal cable bill - count on it. But with DSL out there, its a threat.
DSL is to cable modems what satellite is to cable TV - it provides enough competition to keep the cable prices somewhat lower. Without Satellite TV competition, cable prices would be much higher because they are still a monopoly. Its amazing to think that combined, Echostar and DirectTV would be on par with AT&T in terms of the # of customers for 'cable' service. Like #2 nationwide.
So he's right, regulation probably won't work, but if we do give the telcos free reign over DSL, they better not screw it up or we'll all be stuck with RoadRUnner paying whatever AOL wants to charge!
Personally, I love my DSL connection - offered by a Mom & Pop phone company. Prompt service, installs happen quicklyt, upgrades are a phone call away - love it. :)
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Right now, it costs an arm and a leg for the broadband ISPs to get that last mile in. I say, let em finish eating the cost and *then* deregulate. This helps prevent more Covads from going under.
When I ordered AT&T cable internet, they sent a tech to my house for the *entire* day since I did not have cable to the house at all in the first place. I'm sure that AT&T still has not recovered the cost of this with their $40/month service. I'm not sure that things are much better for DSL. The Ameritechs out there can eat the cost for now as they have other bread and butter to play with.
Life is the leading cause of death in America.