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FCC's Powell On Monopolies
A reader writes: "According to this Washington Post article, the FCC's Michael Powell wants to do via rulemaking what Congress wouldn't - give a big wet kiss to the Baby Bells. Proposed rules would exempt future investments in broadband from unbundling requirements that make competitive local exchange carriers like Covad viable, instead considering (pretending?) that cable, satellite, DSL, and whatever future broadband the Bells choose to deploy are sufficient competition. Says Powell: "our greatest challenge in promoting broadband is deciding how best to stimulate enormous private sector investment." Consumer advocates are of course not amused."
Unless you live in a major city, you probably can choose between no more than two methods of accessing the internet. Here in southwest Reno, there simply is no cable, and no service for getting satelite feed into your home; it's DSL or dial-up. (Or, I suppose, you could pay to have a T1 run into your home like a couple guys I know.)
Monopolies on a regional scale are no worse than monopolies on a global scale. Rockefeller got his start with regional monopolies; even though the price of gas may have been a full 50 cents cheaper 40 miles away, nobody was going to drive 40 miles to fill up their tank.
Besides, isn't this like saying that it's okay for ABC to control every channel on TV, because, hell, there's still movies and radio, right?
"Beware he who would deny you access to information, for in his heart he deems himself your master."
Personally I could do without all the in-betweens. We tried to have DSL installed at an office we had once rented. It took 2 months; the coordination between the service provider, the line leasing co., the trunk line owner, and the various other parties was abysmal. Then after installation, you had to "make the rounds" whenever there was a problem ("Oh, that's not us. That's an upstream problem. Contact Company X"). Conversely, installing cable modem service was simple. Within 3 days, it was up, running, and faster than DSL. And when it goes down, there's one place to call who can resolve all the issues. I'm sorry, but middlemen for the sake of middlemen just does not make sense, especially when they provide no value to the service in the end, and can actually muddy up to whole process.
First, I think it is ludicrous to assume (pretend?) that DSL is the "big dog". There are about 2x as many cable modem subscribers as DSL subscribers. So acting like the RBOCs don't have competition is just dumb.
Secondly, if you factor in equipment costs, DSL is more expensive to offer (by a significant margin) than Cable Modem service. In effect, those $40+ price points for DSL are there because its really expensive. And wholesaling to Covad, etc, doesn't fix that problem. Nothing fixes that problem except time. So I don't find anything wrong with the RBOCs being cautious about deploying broadband - they spend billions on equipment, billions on fixing the installed plant, and, yet, they don't make a lot (any?) money per customer.
Think for a minute. If Cable Modems are cheaper to deploy, more profitable for the operator, and outpace DSL 2 to 1 in deployments (and possibly growth as well), don't you think that there might be a reason for that? Don't you think that is a perfect example of competition (even between oligarchies) at work? Or do you somehow think that the laws of physics and economics don't apply to broadband, because you think its really cool?
I mean, for goodness sakes. If Slashdot had been around in 1972, you'd be complaining that cable service only passed 20 million homes, bitching about how the cable companies were deliberately stalling, and agonizing over the lack of "overbuilders" to spur competition. Conveniently ignoring the billions of dollars of equipment and millions of man hours that went into making that system work and grow.
Get over it. Broadband is deploying quite rapidly, given the enormous financial issues. Competition is working, and the RBOCs are in second place. Resellers didn't change that in the past, and there is no reason to believe that they would change that in the future. Frankly, the problem that everyone needs to worry about is whether the cable companies will end up as the monopoly residential broadband providers, not the telcos. This whole 'resale' issue is minor league stuff.
My login isn't working - this is Gorrpet.
... was not to open the local areas to competition (as the BabyBells and their ilk claim which slows "progress"), rather it was the institutionalizing of the monopoly on local infrastructure by what was in effect a giant telecom company.
Fundamentally, the only really decent way to fix things at this point is this:
Force the spin off of the local physical plant into a seperate company. That's right. split the Bells into a telecomm and a wires company. Give the wires company complete ownership of everything from the local CO to the customer. AND FORBID THEM FROM DOING ANYTHING ELSE BUT RENTING THEIR WIRES FOR SOMEONE ELSE TO USE.
Presto! Everything is solved! The local wires company takes care of all maintenance, has no incentive to prefer one telecom player over another, and will invest in upgraded technologies if someone wants it. Even better, this type of company is easily stimulated by government legislation to put in infrastructure where it might otherwise go (e.g. "We'll give you $100 per line if you wire areas with less than 10 people per sq mile" - that's how we got the country wired for telephone).
The Bells and all the CLECs then get to slug it out on a more level playing field (where the Bell's size does lead an advantage, but no more so than granted anywhere else in business).
While the Bells own the local infrastructure, it's always going to be a battle. It's not one which we have to fight. And frankly, this is such an obvious thing to do that other than hard-core lobbying by the Bells, there is no sane reason NOT to do it.
-Erik
Disclaimer: I work for Covad, a competative DSL CLEC.
There are always four sides to every story: your side, their side, the truth, and what really happened.