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More on Media Consolidation/Deregulation

Posted by ryuzaki0 on from the one-voice dept.

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.

34 of 337 comments (clear)

  1. So what if Verizon doesn't have to share fiber? by alen · · Score: 5, Insightful

    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.

    1. Re:So what if Verizon doesn't have to share fiber? by alen · · Score: 4, Insightful

      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.

    2. Re:So what if Verizon doesn't have to share fiber? by u19925 · · Score: 5, Interesting

      many counties and cities have laws which will not allow you to lay a fiber into homes if similar thing already exist (even if it is owned by some monopolist). this means they will keep the prices so high that the total of (price*subscriber - cost) is the highest irrespective of what the price should have been if it were open market. Let us say, their internal research says following:

      1) at $300 rate, we can get 10000 subscribers
      2) at $30 rate, we can get 100,000 subscribers.
      3) the cost per subscriber is $10

      Now guess, what route they will take? obviously the first one. if competitors were allowed, you would see about $12-$15 rate, but thanks to monopoly; the rate is now $300!!!

      Some cities may have some oversight commission which will prevent such high prices, so they may settle slightly lower price. but they can always lie and say their fiber maintanance cost as $200.

      this is not my invention; this is exactly what is happening in local phone and cable market. i have exaggerated the figures in the example but overall the strategy is same. look at how the long distance rates have fallen over time (my per minute cost for long distance is 60% lower than decade ago) while local phone rates are going up (i am paying 40% more).

    3. Re:So what if Verizon doesn't have to share fiber? by kableh · · Score: 4, Insightful

      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.

    4. Re:So what if Verizon doesn't have to share fiber? by drgroove · · Score: 4, Insightful

      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.

  2. Verizon's Fiber by Klerck · · Score: 5, Insightful

    ...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.

    1. Re:Verizon's Fiber by Spytap · · Score: 4, Insightful

      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?

    2. Re:Verizon's Fiber by Cyberdyne · · Score: 4, Insightful
      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.

    3. Re:Verizon's Fiber by mpthompson · · Score: 5, Informative

      Not all local governments are corrupt in the manner you describe. On the San Francisco Penninsula there is the San Mateo County Telecom Authority (SAMCAT) that encourages multiple telecom and cable companies to offer service throughout San Mateo County. The major hurdle here is not getting local governments to grant multiple franchises in the same geographic area (this has already been done on multiple occasions), but getting the competing telecom and cable companies granted a franchise license to actually spend the money on infrastructure to offer competing services in the current down economy. In most communities there still is only a single choice because the established provider is the local 800lb gorilla, but at least there is some hope for real competition once the industry starts growing again.

    4. Re:Verizon's Fiber by Catbeller · · Score: 4, Interesting

      I'll take this one, begging the original poster's pardon.

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

      Whenever I see the phrase "common sense", I mentally reach for a shotgun.

      What you say makes "sense", if you selective the proper facts and ignore all others that contradict you. It's not common sense, or economics: it's economic theology.

      A private company is not an entity in a pure economic thought experiment.

      For one, Verizon is government subsidized. Yes, I said they are welfare recipients. For, every dollar they weepingly spend on infrastructure, they DEDUCT FROM THEIR TAXES. When you or I buy a car to go to work, we don't deduct the finance charges, actual payments, refinancing costs, or debt sale costs that Verizon does. Verizon gets this government handout so that it may... actually, I never did understand why. They are powerful, and they get to do this. Period.

      Secondly, if Verizon screws up, they DEDUCT THEIR LOSSES FROM THEIR INCOME TAXES. The "risk" that they take is government insured, because the taxpayers will be further taxed to make up for the money Verizon will not pay if they screw up.

      Third, Verizon may or may not be granted tax relief from local governments for installing various doodads. Another taxpayer-paid welfare grant.

      Fourth, when you create a network that is essentially granted to you by access and rate giveaways by the Federal government, you can set up an effective monopoly -- not only over physical infrastructure, but over the content that is provided over that network. Powell has many times indicated that political bias is hokey-dokey in a medium, because so many other media exist to balance it. So, an ISP who is also a provider can control the messages going over its network. Not only a physical monopoly, but a political one as well. Somehow this would be a bigger showstopper for Powell if that bias was not hard-right, I think.

      Now, this monopoly does not have to exist. But Powell's economic theology insists that it must, because, like most libertarians, ignores all factors that do not bear on the illusion of a clean sheet economic problem, ie, a company provides a service, competition can try to compete, all is good. His ideology ignores back room dealings (mainly because he is a consummate backroom artist, being a lobbiest for the telecom companies in his off time!), nasty business manipulation, predatory pricing, in short, all the nasty, dirty tricks that were rampant in the old Standard Oil trust days that have come again.

      And, the standard isn't recouping investment. Businesses are there to take over a market, not make back their money. They have no limits.

      Private busineses are there to steal a much as possible. This is balanced by government elected by the people which regulates the rascals.

      What has happened is that Bush's people have appointed the industry lobbyists to be the regulators of the industries they represent. The rights of the people to actual competition for services is being ignored: businesses are treated as feudal lords who should bear no oversight.

  3. Less than an hour to make those calls... by tbase · · Score: 5, Informative

    The FCC is set to vote on their secret-none-more-secret changes to the media ownership regulations on Monday. If you like the direction commercial radio has taken in the last few years, don't worry about it. If not, moveon.org has some good resources for who to call.

    --

    666-607: 6th floor apartment of the beast
    1. Re:Less than an hour to make those calls... by nanojath · · Score: 4, Insightful
      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."

      --

      It Is the Nature of Information to Transgress Artificial Boundaries

  4. Comment removed by account_deleted · · Score: 4, Funny

    Comment removed based on user account deletion

  5. Ted Turner in Washington Post by jdunlevy · · Score: 5, Interesting
    The Washington Post also has an opinion piece by Ted Turner on the approaching FCC decision on media owner ship (decision on Monday). Among other things, he writes:
    I am a major shareholder in the largest of those five corporations, yet -- speaking only for myself, and not for AOL Time Warner -- I oppose these rules. They will stifle debate, inhibit new ideas and shut out smaller businesses trying to compete. If these rules had been in place in 1970, it would have been virtually impossible for me to start Turner Broadcasting or, 10 years later, to launch CNN.
    1. Re:Ted Turner in Washington Post by Zirnike · · Score: 5, Insightful

      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.

      --
      I'm not shy, I'm stalking my prey
  6. Deregulation from a consumer perspective.... by BWJones · · Score: 4, Interesting

    Well, looking at the cable industry I can only say that deregulation has simply resulted in higher cable bills. Prior to deregulation I paid $9.95 U.S./month for cable, now I am looking at $51.00/month and the only new channels available to me now are things like shopping channels, multiple MTV channels and other crap I have no interest in. In fact, what they have done is packaged channels I did watch into more expensive premium packages meaning I can no longer get Speedvision or others I am interested in without paying even more.

    The technology exists for us to be able to purchase channels ala-carte yet we still have to pick "packages" and only have access via the cable companies or the dish companies. Perhaps Apple could help things out the way they have the music industry?

    --
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    1. Re:Deregulation from a consumer perspective.... by zztzed · · Score: 5, Informative

      It's not the cable companies preventing you from ordering these channels a la carte, it's the channel owners. The packages are sold to cable companies as packages, and they're required to be sold to consumers as a package.

    2. Re:Deregulation from a consumer perspective.... by BWJones · · Score: 4, Interesting

      It's not the cable companies preventing you from ordering these channels a la carte, it's the channel owners. The packages are sold to cable companies as packages, and they're required to be sold to consumers as a package.

      To what end? To me this is the same logic the RIAA and the record companies were using to prevent folks from getting the songs they wanted ala-carte. These guys don't have to worry about piracy in the same way and if I want the history channel, a couple of discovery channels, local and national news with some sports channels for equestrian stuff and motorsport, I should be able to order and pay for just those channels. No shopping channels, no pop culture channels, etc...etc...etc...

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  7. FCC Chairman Michael Powell Interview by Flabby+Boohoo · · Score: 5, Informative

    NPR ran an interview with FCC Chairman Michael Powell this morning, it is available here.

  8. I must have missed it... by Goldberg's+Pants · · Score: 4, Funny

    When was the FCC sold to the telco's and the media?

  9. Register hypocrisy? by Cyberdyne · · Score: 5, Informative
    It will difficult to exercise democracy when the ubiquitous national oracle propagates only those biases that four or five multinational conglomerates wish to see propagated, and which are backed up by co-owned newspapers and radio stations.

    Compared to the UK situation, where 2 of the 5 analogue broadcast channels are part of the tax-funded BBC? (Along with 5 or more national radio stations, a couple of magazines, a serious web presence, and a newspaper with a very similar agenda).

    I really don't think having "only" four or five different TV companies available (to non-cable/satellite subscribers) is a problem - especially when so many people have cable or satellite, giving them literally hundreds of different channels to choose from. Not to mention a huge number of newspapers and magazines, and of course the Internet!

    Keep this in mind: For years, the UK had just three different TV companies - the largest one state-owned, and the smallest subsidised. No cable (that came in the 80s), no satellite (same). With or without these changes, US viewers without cable/satellite will have more choice than UK viewers. I'm not holding the UK up as some sort of media Utopia, but it's hardly the disaster area these guys seem to predict!

    1. Re:Register hypocrisy? by Malc · · Score: 5, Informative

      Having lived in both countries, I would say the UK system is better. TV is of higher quality. It's also vastly cheaper. The TV license fee isn't a tax per se - it doesn't go in to the government's coffers. As it is, your numbers are a bit low.

      At about £10 per month (USD$16/CAD$23) it's really excellent value for money - I was paying (I ditched it) nearly CAD$70/mo for cable (basic cable is something like CAD$44), and ended up mostly watching the BBC or a couple of channels I could watch for free over the air. This license fee doesn't just pay for the 8 television channels, but also 10 national radio networks, 50 local radio stations, and more. I don't know if it includes the World Service too. One has to admit that the BBC's web site is one of the best news sources on the internet. On top of that, the UK has better broadcast quality too having gone wide screen years ago, and now free digital services too.

      The BBC is high quality and provides tough competition for the other commercial channels who would otherwise slip in to the low-quality mediocracy that plagues N. American "free" TV. In fact, some of the newer channels like Channel 5 could very well be American. Personally I didn't like having the choice of hundreds of channels on digital cable here in Toronto... most of the time there was nothing on, and flipping through the channels provided mostly adverts. Bah!

    2. Re:Register hypocrisy? by IamTheRealMike · · Score: 4, Insightful
      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.

  10. Powell backs out of Nightline interview... by aquarian · · Score: 4, Informative

    They just covered this topic on Ted Koppel's Nightline. Barry Diller (who is *against* this deregulation, BTW) appeared along with 1 or 2 other big players. Michael Powell was supposed to appear too, but conveniently cancelled. I say "conveniently" because I really think he's trying to quell the debate now that it's gathered steam, and move forward June 2 with no resistance.

  11. Re:Competition is a good thing in theory... by malfunct · · Score: 5, Informative
    Actually the parent has a point, he just failed to actually finish saying it.

    Competition is good unless the network effect is extremely strong.

    Basically that means competition is good at bringing down prices but sometimes the benefit of having a single solution that everyone uses is more than the reduction of price that would come with competition.

    In this case however I think we have something thats more anti-competative. Phone company A runs fiber to a house (either because they got to the area first or the person in the house requested company A) then when the person with that line decides that company B might have a better service the cost to change companies is prohibitive because company A won't sell its fiber line, or more to the point company B won't use the line from company A that the person already purchased and instead wants them to purchase another line.

    --

    "You can now flame me, I am full of love,"

  12. Support costs by Malc · · Score: 5, Informative

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

    I would have thought a telco could make lots of money by rolling out fiber connections and then leasing them wholesale at above their costs. They won't have to support end users and the costly call centres, services, network infrastructure and bandwidth that that involves. They'll just have to provide the same infrastructure services that they need to provide anyway.

    Where I live, I can get DSL from the my local telco for CAD$45 (1.2mbs), or from a small ISP for $50 (3.5mbs). Apparently the local telco charges ~CAD$20 for DSLAM port leases. I'm glad I'm not paying for useless tech support or a heavily subsidised ISP portal that I would never use. It's easy money: I think they only support the CO, and line from there to the outside of my house.

  13. Media stranglehold by mtcrowe · · Score: 5, Interesting

    Usually, I'm a big free market proponent, but even I can see how media consolidation is a bad thing for the average American consumer.

    Right now, we have four major television networks: ABC, NBC, FOX, and CBS. Watch each network's nightly news broadcasts; they're not all that different. And although news organizations like to say that they're unbiased and "just reporting the facts, ma'am", the way in which you present "the facts" gives a strong indication as to your opinion of it.

    "Republicans Hand Wealthy Americans Large Tax Break" vs. "American Citizens Will Pay Less in Taxes" gives a pretty good impression of what the writer thinks of the tax breaks.

  14. Re:Wrong way to do it. by Cyberdyne · · Score: 4, Interesting
    There is a similar system here in the US on phones. The baby bells own the lines but then lease them at wholesale (regulated rate) to other telcos to provide local phone service.

    And on electricity, in a lot of areas! As well as price competition, it gives you some interesting options - like Green Mountain, who offer 'clean' power (depending on the area, usually generated entirely from wind, sometimes with some hydro or similar) for a slightly higher price.

    Unfortunately, SBC just got our legislature here in Illinois to let them double our rate, because... it's... err... good for campaign contributions I guess.

    I think their reasoning was something about DSL - if they got the rate hike, they could offer DSL to more people?

  15. HA! by s4m7 · · Score: 5, Insightful

    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?

    --
    This comment is fully compliant with RFC 527.
  16. I'm sick of the BS... by Anonymous Coward · · Score: 4, Interesting

    I'm sick of the BS "I own the network and don't want to play nice with others" argument the Bells push. It's about time to remove the Bells ability to do things like that. What it should be is, for all phone, internet, cable, or other such services, there should be one player that owns the network and make the equipment investment. But they would not be allowed to sell any of it to regular consumers. Instead, they should only be allowed to lease the use of the equipment to anyone that wants it...the Bells, private ISPs, private cable companys, anyone. That way there is no conflict of interest that there is in the current system. All the companies are on equal ground. Consumers have a true choice on who to use. You don't like one company, move on to the next one. It won't matter, because the service is all on the same network, just different content. Interoptibility is flawless. There would finally be true competition to provide the consumer with the best experience.

    But unless MAJOR restructuring happens, we'll never see this. The consumer is just the ragdoll being fought over by dogs. Only one dog is a terrier and the other is a rottweiler. Either way, the consumer still has teeth sunk into them.

  17. So what if I get to pay for services I don't get? by twitter · · Score: 4, Interesting
    I work for a CLEC

    I doubt that.

    The "infrastructure" you speak of was built on public property with monopoly protection. It really belongs to everyone. Just giving it to one company gives that encumbent company the ability to rape the public who get to pay the cost of creating uneeded duplicate ifrastructures while suffering the use of ageing equipment. When you live by public protection, you die by it as well. I'd love to see just anyone able to build infrastructure, but I don't think that it's either possible, permitted or required. Alternate networks will be built and we will all pay for them and then the bells will buy the up when they fail because they don't have to co-operate now. Ready for another century of pay per minute rape telco service?

    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.

    No it was not. But my fiber that runs from one side of my house to the other and can't hook into the network everyone else is using does me no good. A network only works if the players co-operate. The Bells have promissed us Broadband Stagnation. This is all just more of the same.

    Society is really screwed up when this what we have to do to escape such a rape.

    --

    Friends don't help friends install M$ junk.

  18. Beware: already largely happened in Canada by Sara+Chan · · Score: 4, Informative
    In most big cites in Canada, CanWest Global Communications owns at least the dominant newspaper and one of the top television stations. In Montreal, the second-largest city, it owns the lone English-language daily newspaper as well as one of two private English-language television stations. In Vancouver, the third largest city, it owns both daily newspapers and two of the top three television stations. It also owns numerous other newspapers, including the major daily in the Canadian capital (the Ottawa Citizen), as well as television stations reaching 94% of English-speaking Canadians.

    The owner is staunchly pro-Israel (his name is Israel Asper): so all CanWest media must provide pro-Israel news coverage of the Middle East. Journalists who don't follow this can be fired or suspended. And all CanWest newspapers are required to print company editorials on national and international issues. Even worse, CanWest is pro the current Liberal government: so the government has done nothing during the past few years while CanWest spread.

    The Economist had story last year and another story the year before giving details.


    __________________________
    "None are more hopelessly enslaved than those who falsely believe they are free." --Goethe

  19. Simple. by RatBastard · · Score: 4, Insightful

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

    --
    Boobies never hurt anyone. - Sherry Glaser.
  20. What??? by uberdave · · Score: 4, Funny

    Sell bonds, build, hope you make money on it and then pay for it over a few decades plus interest.

    <Imagined Corporate Rant>
    *Hope* you make money? Over a few decades?? Listen pal, we've got to show a profit, and we've got to show it this quarter. Decades? I plan to be sipping umbrella drinks on a beach somewhere in a decade, not wondering if we'll finally get a return on our investment. Wake up and smell the business plan, friend. Make money now! Make money fast! Screw everything else.
    </Imagined Corporate Rant>

    --
    "I'm not impatient. I just hate waiting." - My Dad