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FCC Kills Build-out Requirements for Telecoms
Frankencelery writes "In a 3-2 vote, the FCC has altered cable franchising laws in the U.S. to the advantage of AT&T and Verizon. 'The FCC order imposes a 90-day limit on local communities' franchising decisions, but, more importantly, does away with build-out requirements. Those requirements generally insist that companies offer service to all the residents in the town, rather than cherry-picking the profitable areas.' Good news for the telecoms, but bad for cities who want a say in the fiber deployments."
...to think monopolies are reigned in by market forces.
Last I checked, the raison d'etre of monopoly regulation was because market forces had failed.
The FCC makes telecommunications policy via regulations because that limited power was expressly given to them by an act of Congress. Congress has the power to modify the FCC's authority, and has done so on numerous occasions. If you actually read the proceedings of the FCC, they often make reference to the statutory authority that empowers them to deal with an issue, or that limits what they can do.
Mea navis aericumbens anguillis abundat
No, the problem is we have already paid them to roll it out. Not just once but many times over and by multiple levels of government. The Bells were supposed to have had fiber directly to most homes in America years ago by their promises given to obtain huge tax breaks and credits. Instead they have used these increased profits from lower taxes to expand around the world while providing very limited and relatively slow broadband in the US.
This is really coming down to AT&T and Verizon wanting to get more into the "Triple Play" market -- telephone, high-speed internet, and television distribution. Although they're already entrenched in the telecom market, they have to go head-to-head with the cable companies on the last third of that combination.
So posit this: you have Comcast, who currently has to support all of the users in a municipality, urban and rural both. AT&T comes in, and builds out in the most profitable areas (wealthy/dense) only, and starts providing a choice in digital television service. Well, what with Comcast's local history of gouging the hell out of everyone as the only service provider, a substantial number of people in this area switch to AT&T (especially since AT&T is running that price break special for new customers...) Comcast is then forced to do something to compete with AT&T -- offer more services, lower prices, whatever. The two get into a price war, and the customer is offered a decent economic/service environment to get things piped into their home. John Smith, who lives in suburbia, is really benefitting here.
However, AT&T can focus all their attention on this (much smaller) market. The price wars can continue until John Smith is getting the best deal ever. Frank Farmer, though, who lives about 5 miles away, but in a more rural area (or even just a neighborhood that isn't as new), still only gets Comcast. And Comcast, who used to subsidize their rural buildout by keeping prices at a certain level across all their customers, now has a dilemma. In order to help keep their prices in the AT&T zone competitive, *someone* has to take up the slack for the lower prices *and* the loss of customers. Comcast is only going to jack up the prices outside the zone and rape the customers that don't live in AT&T's area. AT&T doesn't give a damn; they don't figure it's profitable enough to roll outside their zone, and Comcast is suffering (it might serve them right for past behavior, but that's another story). Eventually, Comcast has to consider pulling out of the market, because they can't serve everybody. AT&T *now* has a perfect chance to expand to these new, unserviced areas, thus becoming the new sherriff in town. Lather, rinse, and repeat a few years later, when someone else moves in to compete, but in the meantime, you're back to the single-operator monopoly.
Suddenly, you've created a tiered service structure within town. If Frank Farmer wants better service, sure, he can just move...but there's only so much urban density that a city can handle. Sure, he can do without having fancy television, but you start creating zones of haves and have-nots, and the population starts getting really embittered. With their service providers, with their governments, and with each other.
The simplest solution is to treat the fiber/cable infrastructure as a public service, much like power or water, and allow competition on the wires. This is what the government was *trying* to do with telco subsidies the past 30 years; they just got really lazy about cracking the whip, and the telcos started to get out from under the rules that were giving them the tax breaks and cash infusions for buildouts and services.
I'm amazed this isn't obvious. Surely you've considered the potential realities of a market, and not just stuck to a fairytale environment of theoretical economics?
> > Which is bad how, exactly?
> At the expense of equal access, public infrastructure, and realistic phone rates to go along with those
> benefits.
You need to think into the future.
If in a given field, a company is making excessive profits, the fact that that field is so profitable naturally leads it to draw in other companies. This is correct for businesses with low upfront costs. In the telephone and cable industry, there is a high upfront cost to running wire and cable. That upfront cost would off-set and annihilate any chance at profit in the near term. Customers tend to also be apathetic: They will stick with what they have because it involves the least amount of work, even when they hate it. So, any new cable provider in a city would have to offer such deeply cut rates to entice these lazy consumers as to make it not worth the business effort.
Bearded Dragon
Please allow me to plug the open source mesh network project that I've been involved with. If the residents feel that they are being treated unfairly, they should just put up CUWiN nodes, and share to all areas in the city with minimal cost.
http://cuwireless.net/
Here in Nashua, New Hampshire, I've heard the reason Verizon does not offer TV service along with their fiber optic Internet service is that the mayor is insisting on universal access until he allows the franchise (and conveniently preventing competition with Comcast). So I get my TV via a ugly Dish Network dish on my roof, and my Internet via the zippy fast Verizon fiber optic service.
This is not exactly pushing the limits of the bandwidth of the fiber.