More on Media Consolidation/Deregulation

I'll try to accumulate some links not previously posted. William Safire comments. The Register has an editorial; see also The Guardian for more on the British perspective. Associated Press story. The Washington Post has a good and lengthy (and rare) piece. The phone companies are making a cynical political announcement that they've agreed on a standard for fiber-to-the-home; that doesn't mean they'll ever use the standard, and indeed they've already promised *not* to roll it out anytime soon. Note that the FCC is removing any requirement for the Bells to share their fiber, so if Verizon runs fiber to your house, you'll be able to get Verizon service or none at all.

Comments

So what if Verizon doesn't have to share fiber?

[alen]

They spent the money to run it. I work for a CLEC and we have our own phone switches. If VZ jacks up the prices on their circuits, it will only hurt us for a little while since we flip customers to our own network. I doubt the telecom act of 1996 was meant to create an industry that relied on cheap prices by the bells and only on reselling. If you want to be a player in telecom then you need to invest in some infrastructure.

Re:So what if Verizon doesn't have to share fiber?

[alen]

I'm only an exchange 2000 admin, but any capital expenditure is tax deductible. A few years ago we were trying to convince management to treat us as consultants for the cost benefits to us and the company.

The tax code is designed to foster business growth, not an excuse to socialize everything. Other companies are free to sell stock shares or bonds in order to pay for their own fiber projects just like Verizon does. Verizon owns something like $50 billion in debt to various bond holders. That's how they and a lot of other companies and governments finance capital projects like running fiber. Sell bonds, build, hope you make money on it and then pay for it over a few decades plus interest.

Re:So what if Verizon doesn't have to share fiber?

[kableh]

They've been subsidized by the government for years, and they have right of way on public lands to lay their fiber and copper. I'd say the networks are just as much ours as they are the phone companies. That was the arguement for the open access provisions of the Telecommunications Act.

And yea, if you want to be a player in telecom you have to make that investment, but do you really think that even the Bells have the clout to purchase all the right of way and coordinate with thousands of different buyers to lay the networks by themselves? That was why the government stepped in and helped, and that is why we demand a return on OUR (the taxpayer's) investment, namely, a competative market for the consumer.

Re:So what if Verizon doesn't have to share fiber?

[NialScorva]

Or perhaps we should realize that they are natural monopolies and stop pretending that they are anything else. Deregulation has been a huge failure. Look at the manufactured California energy crisis.

Look at the airlines. If they only reason they exist at all is because the federal government keeps pumping billions of dollars into them, why should we pretend that they should be private industry?

Some things just make more sense to be handled by the federal government.

Re:So what if Verizon doesn't have to share fiber?

[drgroove]

There is an inherant flaw in the concept that any of the 'Baby Bells' actually built their networks.

Keep in mind that once upon a time, the Federal Government controlled all telephony.

The Fed deregulated their telephone infrastructure, creating a monopoly - AT&T.

Eventually, a Fed antitrust suit via the DOJ broke AT&T into several 'Baby Bell' phone companies; each taking with them the network infrastructure for their specific geographical location.

However, as the original network was built by the Federal Government, the funding for that network could only come from one source - taxpayer dollars.

The networks have obviously been rebuilt several times since then; however, the point remains that the US telephony infrastructure had its genesis throught public funding.

The current system does not work. Why? Because phone companies - which inherited their networks from the breakup of AT&T - are running their business with an inherant conflict of interest. Each Baby Bell has been asked to both provide telephony service, as well as to allow 3rd party companies access to their networks, in order to provide competitive telephony service.

The model needs to be changed.

In order to be completely impartial and competitive, a separate company or companies should be established, which manage only the network infrastructure for the phone system.

Then, any company which wished to 'lease' or 'rent' the network for the purpose of providing telephony service to consummers would be able to do so.

In this way, there would be a two-stage system, with a central governing body which controls the infrastructure, and separate service providers which charge consummers access to that infrastructure. This would eliminate the conflict of interest that is present in the current system, where the owner of the network is also a service provider to consummers, and therefore in direct competition with others who wish to sell telephony service.

The idea that more companies should invest in additional infrastructure does not make sense for local telephone service. This concept, if carried out, could have dire consequences on the environment (ie, imagine a 10-fold increase in the number of telephone polls and wires across a city!). A network already exists in each city in the US - the problem is the way control of the network has been established.

This same concept could theoretically be applied to all communications systems. Cable lines, cell towers, long distance satelites - all of these could have a controlling body, which impartially allows any number of resellers to use their infrastructure to offer services to consummers.

Verizon's Fiber

[Klerck]

...so if Verizon runs fiber to your house, you'll be able to get Verizon service or none at all.

Isn't that how it should be? If Verizon foots the cost of rolling out thouands and thousands of miles of fiber, shouldn't they be the only ones who can use it?

That's a bit different from phone lines which were subsidised through tax money and therefore should be open to all. If Verizon is the one paying for the fiber, then it should be theirs to use alone if they please.

Re:Verizon's Fiber

[Spytap]

Doesn't the problem then become that Verizon can charge whatever they want becaus eno other company can then also lay wiring to said houses? If you have someone right where you want them, would you trust a company whose primary objective is to make profits and become larger to do what's right for their customers or for themselves?

Re:Verizon's Fiber

[Cyberdyne]

Doesn't the problem then become that Verizon can charge whatever they want becaus eno other company can then also lay wiring to said houses?

Why not? With the existing infrastructure - electricity, cable TV, telephone - the government prohibited competition. This, obviously, created a monopoly for each utility; all the regulatory effort of the last decade or two has gone into reversing the damage from that. With fiber, however, who is prohibiting some other company from laying fiber just like Verizon?

If you have someone right where you want them, would you trust a company whose primary objective is to make profits and become larger to do what's right for their customers or for themselves?

The answer is not to let the government (or their favored company) get you right where they want you. Don't let Verizon be given a monopoly in the first place!

If the infrastructure is too expensive for one company to afford, let them group together to build a shared local network - much the same way Internet peering points work: each ISP wanting to hook up has to pay their chunk of the running costs. That way, nobody gets screwed.

Re:Verizon's Fiber

[danheskett]

How does what you say have any basis in fairness or common sense.

Company #1 spends BIG MONEY to physically lay tons of wire. You then force that company to give away their hardwork - for sometime for a fee and then eventually for FREE - as soon as its done?

That is stupid. STUPID. I'd like to find out where you work, force you to give me 50% of what you make for free. That's what you are suggesting.

Verizon is proposing a big fiber network. Lots of expense. Lots of money. This time around with this telecom network there isn't the government granting them automatic monopolies. If Company Y wants to create a competing network, LET THEM INVEST THEIR OWN MONEY.

Forcing companies to materially help and support the competition is wrong, immoral, and bad for commerce AND the consumer. It forces higher costs, discourages innovation and risk taking, and stigmatizes the development of new technology. Who wants to create something new and exciting if the government is just going to force you to give it away before you recoup your investment?

Re:Verizon's Fiber

[stand]

Company #1 spends BIG MONEY to physically lay tons of wire. You then force that company to give away their hardwork - for sometime for a fee and then eventually for FREE - as soon as its done?

I'm not suggesting they give it away. I'm saying they must be prevented from locking out competition. Competition is good, right?

Verizon is proposing a big fiber network. Lots of expense. Lots of money. This time around with this telecom network there isn't the government granting them automatic monopolies. If Company Y wants to create a competing network, LET THEM INVEST THEIR OWN MONEY.

We're talking fiber to the home networks here. Are you proposing that company Y run a second line into my house to compete with Verizon's line? That is stupid.

Forcing companies to materially help and support the competition is wrong, immoral, and bad for commerce AND the consumer. It forces higher costs, discourages innovation and risk taking, and stigmatizes the development of new technology. Who wants to create something new and exciting if the government is just going to force you to give it away before you recoup your investment?

I'm curious to know how allowing a single company to dictate the terms of my connection to the Internet is good for me, good for competition or good for commerce. There's no doubt it would be good for Verizon.

Again, I'm not saying the Verizon shouldn't be compensated for their efforts to connect us with a high speed network, that's why others should be forced to license the lines from Verizon to use them, but neither should they be entitled to recoup that investment in perpetuity. Nor should they be allowed to selectively lock out whoever doesn't play by their rules simply becase at one time they invested in laying some fiber.

We must realize that Verizon (or any one company) is not going to act in the interest of the public good. If we want the Internet to remain the medium of openess and innovation that it is, we must demand that those interests be balanced with those of the companies that build the infrastructure. Otherwise the Internet just becomes a world wide shopping mall.

Re:Verizon's Fiber

[Catbeller]

Try reading Adam Smith sometime. He not only laid out the market rules for business: he laid out warnings for monopoly and abuse, and the need to control business to prevent such.

Capitalism is a zero sum game. A GAME, not a way of life. We live in a real world, and we need to control gamers so that they do not own everything worth owning, including our futures.

A privately owned network can not only freeze out competition and hike prices. It can progressively control free expression on its network, clamping down on opposing voices and smothering democracy.

HA!

[s4m7]

Does anyone still remember when the FCC was supposed to HELP the consumer, by regulating the communications industry on our behalf?

now, the FCC serves to help monopolies, by regulating the consumer on the industries' behalf. Why is it that mechanisms to prevent consumers getting screwed always wind up being used against us?

key point missed

[Uhh_Duh]

I don't understand how forcing a LEC to share their infrastructure promotes growth. It does the opposite.

Would you pay billions to deploy an infrastructure if you were going to be forced by the FCC to let your competition use it? Hell no.

Come on people. Forcing businesses to share what they build is only going to make them not build it in the first place. Letting them keep what they build will encourage competition and give multiple carriers a fair shot at the same market. Granted, the little guys aren't going to be in a position to deploy billions of dollars in Fiber to homes that are only willing to pay $50/mo for service (I don't see this as a winning venture no matter HOW you look at it) but that's what VC's are for I guess.

If it's a profitable venture, the money will be on the table for more than one person to go after it. If it's not profitable (once again, Fiber to the home at $50 a month? Sorry kids, this isn't magic fairy land) then nobody will touch it anyway.

Capitalism is a beautiful thing.

Re:Ted Turner in Washington Post

[Zirnike]

I like this. The dude knows how to separate his professional responsibilities from his personal ones. A lot... and I mean A LOT... of politicians could take a hint from him. I can't say that I support his views on a lot of things, but I think I can respect this comment, at least.

Private monopolies vs. public monopolies

[cheezfreek]

Note that the FCC is removing any requirement for the Bells to share their fiber, so if Verizon runs fiber to your house, you'll be able to get Verizon service or none at all.

And this is better than a public, government-run-and-regulated monopoly how exactly?

FCC...

[jdreed1024]

Why do we even _have_ the FCC?

I mean, sure, I know why they exist, and why they were created. (And yes, we'd probably be worse off without them, but still, I don't think I'm the only one frustrated with their recent behavior) They were created to regulate and designate the airwaves in the public interest. Except lately they seem to have forgotten those last two words. Cable deregulation was not in the public interest (unless people are interested in paying higher prices). Massive media conglomerates are not really in the public interest.

Seems the FCC is more concerned with helping the big Telcos and special interest groups, instead of caring about what the people have to say.

But I guess that's par for the course in today's government.

Simple.

[RatBastard]

The answer is very simple: our government is for sale.

Re:Less than an hour to make those calls...

[nanojath]

That line of condescending BS from Powell towards the end of the article regarding the fact that he doesn't really see public comment having much anything to do with public policy really burned my bacon, to the extent I felt compelled to address it directly in my comments to the FCC (just submitted).

"Let me also add a comment in direct response to the comments of Mr. Powell to the effect that "You don't govern just by polls and surveys." Public comment is neither a poll nor a survey, it is a vital element of democracy, required by law. And it is apparently critical as the FCC has clearly lost the understanding that their mission is to serve the American public. If the representatives of government choose to treat the voice of its citizens as unimportant, the its citizens will replace these representatives."

Re:Register hypocrisy?

[IamTheRealMike]

Compared to the UK situation, where 2 of the 5 analogue broadcast channels are part of the tax-funded BBC?

It's not exactly a tax. The government has no control over how it's spent for one thing, and changing it is very hard.

Keep this in mind: For years, the UK had just three different TV companies - the largest one state-owned

The BBC is not state owned. I don't know why people think this. The government have no control over it, short of a somewhat mythical (and in the Dyke era almost certainly dead) old-boys network.

Rather, the BBC is controlled by its Director General, and there is a controlling board too. Major changes, like launching new channels, have to get the approval of the media/culture secretary iirc.

So, the state acts as a check/balance. It cannot influence journalistic integrity however.

What About Democracy?

[Popsikle]

While Powell said he values public input on the rules, it ultimately will be of little help in crafting ownership laws that stand up in court. "You don't govern just by polls and surveys," he said. "We have to exercise difficult judgments and abide by the law. If all of our rulemaking was just a case of put them out and take a referendum, things would be a lot easier." - From the Washington Post Article... Isnt that the point of a Democratic Government? We the People, For the People, By The People? Or am I on crack, and thats not the way It it supposed to work!

The AT&T breakup was wrong

[Skapare]

The AT&T breakup was wrong. It was done the wrong way. A breakup was needed. But it wasn't obvious at the time the way the breakup needed to happen. The way it should have been done, which is more clear now, is to totally separate the infrastructure from everything else. And it is still possible to do this now with the coming fiber infrastructure.

What we need is an infrastructure company that does nothing else but infrastructure. That company would own the infrastructure and the access point facility. But they would not be allowed to be in any level of business beyond that in exchange for having the infrastructure monopoly. They would not provide dialtone. They would not provide IP routing. They would also not provide point to point circuits except to common carrier businesses.

Every common carrier would pay the same price to have access to the infrastructure. There would be one price for full dark fiber. There would be another price for partial bandwidth on a multiplexed fiber. Homes should have a minimum of 7 fibers, and businesses of course would have more as needed. But 7 is enough for a massive amount of service in today's terms. One fiber can run hundreds of TV channels and gigabits of digital bandwidth.

The advantage of this split, is it separates the infrastructure monopoly from fair competitive information and communications services, allows choice, and even allows multiple concurrent services. The big money is in the information and communications services, so this will help boost the economy, too. The infrastructure company would be allowed to charge actual costs plus a reasonable profit for a stable long term return on investment.

Re:An opposing view: Myth of Media Concentration

[benzapp]

They are mistaken. Despite many mergers in the media industry in recent years, Americans today actually enjoy more diversity and competition in the media than at any other time in history, thanks to cable TV, Internet, the licensing of new broadcast stations and other factors.

Say what?

If it wasn't for the internet, this statement would be completely laughable. We aren't talking about the internet anyway, we are talking about RADIO. Why bring in other media forms. It is going to be 10 years before wireless internet truly makes radio obsolete, and even then... what about rural areas.

There is NOTHING on TV or the radio. NOTHING. It is a complete crapfest. The folks at the Heritage foundation are just incapable of admitting that in some cases, government regulation is good.

Re:What???

[charon_on_acheron]

Unfortunately, you are both right. So many established businesses now think they have to make a profit right now that they do all sorts of stupid/crazy/illegal stunts to show they are making that profit. Every quarter's earnings statement seems to be the most important thing in the history of the company, because they have to keep the stockholders happy with big profits. This was part of the Enron debacle, and has revealed the lengths a company will go to to show a profit. (Even while the officers are robbing it blind.)

It does seem like some of the Fortune 500 companies are going to go down in the next decade, because they think the short term is more important than the long term.