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."

Comments

This is not for AT&T

[suv4x4]

It's for everyone: if companies are forced to sell where wouldn't sell, this would affect the prices and quality of service for everyone.

There are cases where even "evil monopolists" should be left to do certain aspects of their business without regulators messing in it.

Re:This is not for AT&T

[pembo13]

You seem to imply that they will lower their prices or something. I don't see why they would. In which case they make larger profits.

Re:This is not for AT&T

[ultranova]

It's for everyone: if companies are forced to sell where wouldn't sell, this would affect the prices and quality of service for everyone.

Except the people who, thanks to this decision, can't get any service whatsoever.

There are cases where even "evil monopolists" should be left to do certain aspects of their business without regulators messing in it.

Anything that's vital for the proper functioning of society, and has a tendency towards a natural monopoly - water, electricity, telecommunications, transportation - should be controlled by the society and not by "market forces".

Re:This is not for AT&T

[suv4x4]

You seem to imply that they will lower their prices or something. I don't see why they would. In which case they make larger profits.

I knew people will bend it like this, but there's the deal: you have a certain acceptable price range to offer to your customers, say ~100 ID/mo (imaginary dollars :P).. To break even without regulators, you need say, ~50 ID/mo, and with regulators: ~80 ID/mo.

If you need to sustain certain profitability with regulations that force you to do business where you don't want to, you have two options: neglecting reinvestment, support, quality, but keeping prices in the desired range, OR increasing prices.

It's as simple as that. Your logic makes sense only if they make their investments few times back in profit so they could afford to fix prices to whatever they want and not affected by their expenditures.

In reality however, the profit margin is much thinner, so no such perfect conditions exist.

Re:This is not for AT&T

[Anonymous Coward]

> > In which case they make larger profits.
>
> Which is bad how, exactly?

At the expense of equal access, public infrastructure, and realistic phone rates to go along with those benefits.

Or, was there an upside to corruption that we weren't aware of? Enlighten us how buying off greedy politicians is so great.

Re:This is not for AT&T

[hcdejong]

No, it is controlled by a small subset of society, i.e. the decision makers of the (small number of) companies that control the market. Since their mandate is to increase shareholder value, their view of 'society' tends to be myopic.

Re:This is not for AT&T

[sethawoolley]

Infrastructure investment through government mandate then leads to an effective subsidy on better communication. Better communication leads to more intelligent market choices. More economic exchange means better larger economy. Government collects taxes and spends much of it on R&D grants to feed the infrastructure loop.

At least, that's how the US Government helped Bell Labs with Ma Bell and we all benefited greater than all the libertarian marketscapes in third world countries combined.

Pick a better example next time you spout your neoliberal ideology around here.

Re:This is not for AT&T

[spectrokid]

I lived in York when the water company got privatised. Never seen such a disaster. It wasn't just a license to print money, it was also a license to be incompetent. Now with telecom, one can argue to which extent it stil is a monopoly. And people wo go living in the middle of nowhere should learn that this comes with a price tag. I can remember stories from Belgium where millionaires built illegal expensive villas in protected woods. Even though the constructions were illegal, the utility companies had to spend fortunes to connect these houses, paid for by suckers who live in appartments. And five years later, when they get kids, they go and complain to local politicians because there is no busstop anywhere near. So now the bus from A to B has to stop 10 times instead of 5, doubling travel time. Living in a city is better for the environment (less transport) and better for the community (public transport, utilities, schools...). It should be rewarded.

Re:This is not for AT&T

[tacocat]

My phone bill after the Ma Bell breakup didn't reflect this.

All my bills following the deployment of broadband intraweb thingy didn't reflect this.

In fact, all my (tech) bills are rising faster than inflation and I have only experience more dropped calls, lower data rates, and poorer (image) quality television.

They may make in investment in infrastructure, but that doesn't mean a realized benefit to the customers in every case.

Re:This is not for AT&T

[Dachannien]

Your Christmas light shop doesn't benefit from owning rights-of-way (or benefitting from another company's right-of-way) on both public and private property. It doesn't hold monopoly power over Christmas lights.

In exchange for having their monopoly and rights-of-way protected by the government, it's only fair that utility companies would be required to give something back to the community, especially since there's such a huge public benefit at stake. If a utility company is considering moving into a hence-unserviced market, they can take into account servicing that market's outlying areas when they make that decision.

Re:This is not for AT&T

[rollingcalf]

"It's up to me as a business to decide whether I wanna sell you christmas lights, or I don't wanna sell you christmas lights. If my shop is in New York and my profits are just fine, it's not up to some regulatory institution to insist I open a clone shop in every single little village in the country."

With your Christmas lights shop you aren't digging up miles of public property to create the means for selling your lights. If you ever do start to do that, it becomes the public's business to say under what conditions you can dig up their property. People in a town may not want to deal with road closings and jackhammer noises and other disruptions if their block isn't going to be able to make use of the infrastructure buildout that is causing that disruption.

"If you want my service, move to a place where I offer it, or use someone else's service. Simple as that."

If you want to disrupt my days to build out something for your service in my town, you better make it available to me, or go to another town. Simple as that.

Re:This is not for AT&T

[baldass_newbie]

institutional investors such as governments statistically beat out rates of returns compared to individual investors

That's because the government can print money faster than individual investors...
BTW, the government is not a direct investor in companies, i.e. stockholder. And while mutual funds and investment companies might beat out YOUR individual rate of return, they do not beat mine.

You might want to read some Friedman. His economics work a lot better than Keynes'.

Re:This is not for AT&T

[Toby The Economist]

> Infrastructure investment through government mandate then leads to an effective subsidy on better
> communication.

People have n money available to them. They spend it optimally - at least, more optimally than anyone else can spend that money on their behalf, because they know most about themselves, more than anyone else.

When the State appropriates money and decides what to spend it on, that money is AT BEST spend as efficiently as it would have been otherwise (in the case where the State spends it exactly at the individual would have).

However, of course, what actually happens is the State spends is less - and usually far less - efficiently, by spending it on things that are way down the list of efficient uses of money for that person.

So, the State comes along and appropriates your money and spends it on telecoms.

Let's say for the sake of argument it actually works okay out, no corruption, political football, bad decisions, porkbarrelling, etc, and we actually *get* telecoms from this.

So now, here I am, when I need badly need cheaper winter heating and building materials because my house is in disrepair, and what have I got? well the State took the money I would have spent on that and bought me telecoms instead.

That's a pedagogical example to describe the concept; we, as a mass of individuals, direct our money towards the things we need most. We, individually, know best of all, what we need. We, as a mass, therefore provide a demand for a range of services and goods. The finite resources available chase this money and provide these services and goods.

Trying to shortcircuit this process is utter madness, because it is as optimal as we can get.

When the State gets involved, it's always *awful* - the wrong demand is created, the right demand is therefore unmet, the State generally chooses a *single* service and provides it to everyone (e.g. you will all use the State medical service) where the normal market provides a range of companies and so people have choice to suit their needs and preferences, and of course there's also the administrative cost overhead of State (another layer using up money to decide how to spend the money), and the deadly issue of State spending being corrupt, badly chosen, porkbarrelled and bounced around as a political football.

Re:This is not for AT&T

[Toby The Economist]

> > > In which case they make larger profits.
> > 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. These new companies then undercut - just a little - the existing companies, to steal their customers. This is the beginning of the virtuous (for the customer) cycle of price cutting until companies cannot reduce prices any more.

Markets are not static entities - they are dynamic. They self-correct, in the absence of State regulation, which permanently distorts markets and either increase prices or restrict supply. (New York renting laws, for example).

Re:This is not for AT&T

[brennanw]

Sure, but most of the time companies prefer to go after existing customers, because there's already an infrastructure and a market there.

Very rarely do you hear a company say "hey, we're going to market our wireless internet service in the slums, where no-one can afford the rates we want to charge!"

Re:This is not for AT&T

[Anonymous Coward]

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?

Re:This is not for AT&T

[acvh]

I feel for you, but I don't see any way that this could be true. Fifteen years ago I paid Compuserve 6 dollars an hour for 2400bps online access. Ten years ago it was a local dialup ISP getting $29.95 a month for "offpeak" access at 56k. Today it's 29.95 a month for 3Mbps access.

My local phone service today includes all the long distance I can eat, voice mail, more call handling options than I'll ever use, and costs 60 bucks a month. My parents paid a base fee for service, had to buy "message blocks" for local calls, and paid anywhere from 45 cents to a buck and half for long distance minutes.

Ten years ago I got my first cell phone, and paid $1 a minute for the first 20 minutes of usage, then 69 cents after that. Today I pay 10 cents a minute for the first 700 minutes (on two lines even) and something for going over, which we never have. I can make calls anywhere I go, never pay for roaming, and the only time calls drop is when I'm driving.

I don't usually think of TV as "tech" in this context, but ten years ago our cable bill with HBO ran something like $75(?). Today Dish costs us $80, with HBO and a DVR.

Re:This is not for AT&T

[Ngarrang]

> > > In which case they make larger profits.
> > 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.

Re:This is not for AT&T

[budgenator]

I read a book written by Peter Lynch and he said an individual investor can kick an institutional investor's ass any day, and when an institutional investor of Lynch's stature says I can kick his institutional ass, I tend to believe him. Just think about it if a stock gets rocked by bad news, I can sell the couple blocks I have pretty quickly, can the instituionals sell thousands as quickly or even sell any without imploding the buy bids?

You can't beat the 'phone company.

[Anonymous Coward]

Especially when they own the regulators.

Good to see corruption and graft still thriving in the USA.

who is getting paid off?

[bakana]

Somebody just got a brand new phantom in their driveway via payouts from Telecoms. The FCC are the ones that required cable companies and sat companies to sign individual franchise agreements with each city that service was offered. Why would they go and allow telecoms to skip that step with their services? At the minimum mandate that they have to roll out their products to everyone. Crazy!

Re:who is getting paid off?

[kfg]

Why would they go and allow telecoms to skip that step with their services?

There has been a revolution. It was even televised, so I'm not sure what your excuse for missing it is.

KFG

wow, so naive...

[Anonymous Coward]

...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.

Well said

[Travoltus]

I say we go back into time and repeal the Tennessee Valley Authority and the Rural Electrification Act so that neo conservatives like your forefathers would not get electrical service in the rural areas of the country.

This way, the electric companies would not have to serve you and your parents most likely would have never survived to spawn you as they would have died of exposure.

Or, more likely, they would never have learned about the world beyond their tiny little farm, and would never have Beverly Hillbillied their way out to whatever sub/urban place you live now that has electricity.

We in the Blue States proudly endorse the FCC's move - in the hopes that more rural neo cons will be denied high speed internet access, thus hindering the spread of the plague that is your corporate statist "let them eat cake" line of thinking.

Re:Well said

[smchris]

OK. moment. moment. moment.

No, it's stupid.

I'm so old and grew up in so rural an area, I realized very young that I profited from rural electrification. My mother still displays an "antique" kerosene lamp. Didn't purchase it. Family possession.

Sure, people complained that rural electrification was unprofitable. We could probably find some blowhard who complained at the time that it destroyed the opportunity for rich people to experience a Deliverance Weekend amongst the simple people who still played banjo on the porch in the evening. But can't most of us agree that _some_ national infrastructure standards are good for everybody? The libertarian miserliness screaming that somebody else is getting a few of their projected pennies of savings makes a mockery of the idea that there is an "American People" and that we are a "society" that share anything at all.

That's alot of power / control

[It's Atomic]

I'm not from around your neck of the woods, and honestly couldn't tell you if the decision was a good or a bad one. Nor do I understand the consequences or background to the situation, even after RTFAs.

The very fact that the decision had to be made leads me to believe there are communities, cities, populaces with many thousands if not millions of people who want a say in how their town is serviced by a telecommunications company. Some kind of kickback, like a swimming pool, or some franchise fees.

To my naive way of thinking, it seems incredible that 5 (3-2) people can veto the decision making process / power of entire cities or possibly even states, throughout the entire country.

It also seems kind of wrong. Power, corruption, ultimate power, you know, that kind of wrong.

Re:That's alot of power / control

[ObsessiveMathsFreak]

To my naive way of thinking, it seems incredible that 5 (3-2) people can veto the decision making process / power of entire cities or possibly even states, throughout the entire country.

Look pal, a modern economy needs efficient, lean companies squeezing every last drop out of their emloyees and resources so CEOs can be amply rewarded for growth at any cost. How are our companies supposed to remain lean if they have to go chasing 30, 40 500 or 5000 or whatever other communistic amount of regulartory board members so they can be given their brown paper envelopes containing unmarked used dollar bills?

No, I say. No. What we need is a small manageable amount of bribable individuals so companies can spend less resources on bribery, and more on running their business more efficiently.... into the ground. The current number is great. Sometimes you don't even have to pay them. You can just bombard them with marketers, PR guys, dime a dozen scientists and regatta parties and they mostly just end up actually believing what you say. Great stuff.

Re:That's alot of power / control

[speculatrix]

whilst I applaud your irony, as with the best irony there is truth in it. The snag is that we the public are responsible for rapacious control by the big corporates. Yes, really, because our pensions are invested in corporations and we demand the highest growth in our savings and most people have no interest in how the money is invested or the consequences of the pressures to perform placed on the investees. If a corporation fails to meet the demands of its shareholders, it is punished hard. The snag is that people most dependent on managed pension funds are those most likely to be hurt by their actions - people who can manage their own pensions are likely to be wealthy enough and high enough up the corporate ladder to have some say in their life.

Why is the FCC making policy?

[dircha]

Presidents adding oral ammendments to bills and unelected agencies enacting legislation.

This is just yet another example; it is rediculous. Where is the mass outrage? Shouldn't Republicans be outraged by our government wiping its ass with the Constitution - limited government and separation of powers? Shouldn't Democrats be outraged as the government continues to redistribute our hard earned money into the pockets of its corporate sponsors?

I mean ordinary people. I'd like to think I'm an ordinary person, but polls say otherwise. Why aren't ordinary people outraged when they see these abuses and corruptions?

Re:Why is the FCC making policy?

[Detritus]

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.

Re:still so naive...

[sethawoolley]

build-out requirements are part of the franchise bargain that telcos get when they want to run their lines through public property. Franchises are a form of monopoly. How is my discussion of monopolies and regulation irrelevant to franchises without a regulatory balance?

Would you rather nobody be allowed to burrow on public property to build out the infrastructure for the Internet? That's what we'd have if the city were not allowed to make such bargains. Unless, of course, you want the city paying for all its own infrastructure, and owning it directly. You'd like that, wouldn't you?

I'd take either, but you can't pick and choose who wins in such a bargain unless you want to be thought of as interfering in a business negotiation.

How many other ways can I deduce your philosophy into a contradiction? Shall I continue?

Re:still so naive...

[sethawoolley]

You gave a sentence that gave a general rule that was then specified to apply to this case.

I challenged your general rule. If it's not applicable, and if it's not your philosophy then something doesn't connect.

If you think this case is an exception to other philosophies regarding monopolies, then you have yet to give a basis. Build-out requirements are one of the fundamental bargains telcos make to become a franchise operator.

This is big government interfering with the market-based decisions of a local government. How you sided with big government in this case is beyond me. I'm still searching for why.

Ammo for communities building their own fiber ?

[StarsEnd]

As seen on slashdot before
http://yro.slashdot.org/article.pl?sid=05/01/05/02 9222, various companies attempt to hinder broadband rollout by governments.
Will this decision then reduce the resistance against municipalities building their own infrastructure? If my township isn't one of the cherries to be picked by the companies, we can pick it ourselves.

Re:Its the FCC on monopoly and duopoly

[Umbral Blot]

Should be:
In capitalist West the government listens to rich telcos.
In the Soviet Union the rich telcos listen to the government!

some days I really do wonder who is in charge

Good for small telco's too

[zaaj]

In my area, there's an ISP that's also a CLEC (Competing Local Exchange Carrier - they offer dialtone). They're building out fiber to buildings for Ethernet and telephony services, and would like to get into video (TV) but since they're a small company, they just can't do it if they're going to be required to build-out to the non-profitable areas. It's not just a matter of raising prices for everyone to subsidize the sparsely-populated areas, it's a matter of not having the access to the capital required to do such a build-out in the first place. That, and the "densely populated" areas around here are not big enough to make the subsidization idea feasable even if the build-out could be done.

Here's another perspective - the telco's are only offering DSL in specific areas - sure it's probably primarily for technical reasons - certain radius from the CO for DSL to work, but if they can "cherry pick" for DSL, why not the rest of the services they offer.

On the other hand, arguments about large numbers of rural residents not having phone or electric sevice now if the build-out requirements were never in place are hard to ignore, and high-speed internet is being considered a basic necessity by more and more people as time goes on. Perhaps the FCC doesn't agree about that, or perhaps they figure having wide-spread fiber deployments at all would be a better starting point to eventually get fiber to rural areas than if fiber wasn't in the city/town at all.

Re:This IS NOT A Good Thing!!

[moeinvt]

No, this sucks.

You're talking about marginal profits and not aggregate profit. The local government is making a deal which guarantees that the provider has a monopoly on the market. What's wrong with them negotiating a part of the contract which mandates a rollout plan to all citizens?

So, they have the right to say "NO" but they don't have the power to negotiate if they say "YES"?

Your "other business" comparison is generally ridiculous. Although you could probably come up with some parallels, these would be the exception. What other business has a barrier to entry like the cable and telecom industry? A more appropriate parallel would be giving a convenience store exclusive rights to the market in a particular town, and allowing them to refuse to sell to anyone that isn't within 20 miles of the town center.

Local control is best. We don't need the draconian FCC enforcing the will of the empire on every town and city in the U.S.

You are assuming

[Gr8Apes]

Your assumption is that others can enter the market. In the US, in most localities, both the physical phone and cable networks are monopolies, so you only have a single supplier for each. Until the service and the carrier are separated, this will continue to be a problem. Especially when the existing networks were built at taxpayer expense, and new systems would have to be built at cost.

The fair thing to do would be for localities/states/feds to divest the various companies of their physical networks, much as was done with electricity deregulation, which at least levels the playing field for everyone. After all, they were paid for with taxpayer dollars, so it only seems fair that the taxpayer owns them. That'd be us, btw.

required buildout is good

[theBeak]

Having lived most of my life in a rural area only minutes from a major metro area, I can tell you if it weren't for buildout requirements, I wouldn't have phone, garbage or power service. Utility companies are GIVEN many privileges when it comes to their for-profit business, such as easements through public and private property to run cabling. Do you really think anyone would WANT a string of 200-foot electrical towers going through their property? Of course not. But the government allows easements through properties for the GOOD OF ALL. In exchange for these privileges, the companies are expected to service everyone. Also, requiring these infrastructure providers to service every area helps promote growth of both residential and business areas. How quickly do you think an area would develop if the basics like power and data had not been provided for during infrastructure installs and upgrades? There are those who say this sort of situation fosters competition, i.e., some upstart little company will come along and service those who the big boys won't. That may be true in some areas, but not telecom. If a company says area A isn't profitable, so we won't service them, how will another company be able to service them without the profitable areas to make up for it? The answer: they won't be able to. That's why these buildout requirements were set up in the first place. The goverment was essentially saying to the providers, "Look. You have to analyze your profitability across the board, regardless of whether that two square miles at the edge of your service area are profitable in and of themselves." Every business has an area (or more than one) that is less- or even non-profitable. It's called the cost of doing business.

No, you need to think into the future.

[raehl]

We have two kinds of companies offering broadband services, the cable companies, which have to offer service to everybody, and the phone companies, which only have to offer service where it is the most profitable. The most profitable place to offer service will be where it is cheapest to offer service.

The problem is, the phone company is allowed to set their prices based on the cost of providing service to a particular customer. If providing service toa customer is expensive, the phone company doesn't have to do it. The cable company doesn't have that option - it has to provide service to everybody. So the phone company drives down the price in the profitable areas, and the cable company is screwed - if they lower prices to compete, they still have to provide service to the unprofitable customers, and are eventually forced out of business because they arn't making any money. IF they don't lower prices, the phone company will just lower prices JUST ENOUGH to undercut the cable company, not really saving the cable company any money, while the cable company will probably have to raise rates for everyone because, now that they've lost their profitable customers to the phone company undercutting them, need to cover the increased per-customer costs of being saddled with only the expensive customers.

So, everybody loses - the profitable customers end up paying higher rates to the phone company because the cable company can't compete, and the unprofitable customers end up paying higher rates because they're not being subsidized by the profitable ones.

Now, I'm not saying that unprofitable customers should have the same rates as profitable ones - if you choose to live out in the boonies, that's your choice. But if we're not going to force phone companies to build out to everyone, then we shouldn't be forcing cable companies to do so either.

You're mistaken.

[raehl]

California's market was never deregulated. That was just utility marketing speak. It was RE-regulated. They changed the old regulations to new different regulations. And the new regulations sucked. The REGULATIONS about how you could charge for power are what allowed Enron to do their dirty tricks.

OK, forget about the slums.

[brennanw]

Think instead of remote rural communities where the cost of setting up the infrastructure is too high for big companies to want to bother when they can spend all their time making money off of cities.

Rural communities already went through this with cable tv -- cable companies wouldn't put down the cable because it was too far away, and then when some communities tried to go with satellite TV instead the cable companies got a COURT ORDER forbidding them to do so because the cable companies had exclusive agreements with the states.

Profit is made off of these services because the companies that sell them want the services to be *indespensible*. Trying to market a service as indespensible while refusing to provide it to certain segments of society does not make for a healthy society.

So in answer to the question:

And just why should we want companies to have to market in areas where there are small / no profits to be made?

When a company decides to claim a monopoly on a service (and when you purchase a franchise from a community or state government you generally wind up having a monopoly in that area) then they have a responsibility to make that service available to all citizens. A monopoly is a different beast from standard business practices, because there are no other choices to make.

Re:OK, forget about the slums.

[vokyvsd]

I'm asking this honestly, because I want to know: do you have citations for that info about cable companies getting court orders preventing rural consumers from obtaining satellite? I haven't heard about it before, but I don't follow that particular market too closely, either. If what you say is true, I would like to read about the circumstances.

Anecdotally, I can tell you about my situation. I live in a rural area myself, where cable stops about a half a mile from my house. It sucks, but I don't feel that I'm *entitled* to cable internet. Sure, there is only one cable provider in the area, but when we got wireless a few months ago (the antenna is on top of the local grain silos, how's that for rural?) the cable company didn't complain. There is no bad blood on either part. It simply wouldn't be profitable to run cable half a mile for one customer, and we understand that. So, we go to a competitor, and they understand that. I don't see why the law should force them to run their cable out to us if it won't be profitable. It is not paid for by my taxes.

I know it sounds like I'm sacrificing my soul at the altar of profit or whatever, but think about this: if the state forced the cable company to build out to my house, or beyond, the start-up that provides wireless would probably not have come to our area (we were in close contact with the company, trying to get them to come out here). If the state forced build-out, it would have (1) lowered the profits of the cable company, (2) lowered the profits of the wireless company, and (3) probably prevented the wireless company from even coming here and providing internet to others who are quite a bit farther from the cable line than we are. As it is, we and our neighbors get our internet, the cable company doesn't have to worry about unprofitable build-out, and the wireless company is making some good money in a new area. Like I said, this is purely anecdotal, but the theory applies elsewhere: don't force companies to provide a service, let the demand from the consumers make it desirable to provide the service.

This is why I am so interested in reading more about cable companies claiming monopolies. Build-out laws would have hurt my area, but if they really are stopping competitors while still not providing the service themselves, then yes I agree with you, they should be subject to such laws.

Re:OK, forget about the slums.

[Fulcrum of Evil]

I'm asking this honestly, because I want to know: do you have citations for that info about cable companies getting court orders preventing rural consumers from obtaining satellite?

I remember the cable companies suing to prevent municipal broadband projects a couple of years back. This was back when some cities didn't have broadband or even planned rollouts.

live in a rural area myself, where cable stops about a half a mile from my house. It sucks, but I don't feel that I'm *entitled* to cable internet.

Well, you actually are. You got that entitlement in exchange for the cable company being the only cable company in the area. At least until this latest thing.

Join a Mesh Network Project!

[mailseth]

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/

No; Good for cities that want a say...

[randomjohndoe]

Break the monopoly! Local governments want universal access? Then they should build it. Fund it through long term bonds like other infrastructure. Let ISPs, Telcos and Cable TV companies compete to provide service through the community owned fiber. Now you're not locked into carrier owned infrastructure. End of monopoly. Watch for the big companies to hate this as much as they do municipal wireless. Then you'll know it's good for the consumer.

Required buildout NOT so good

[alteran]

I understand how someone living in a rural area might want build-out requirements for cable francising. But let's face it-- TV viewing and internet access are NOT phone service or electricity.

Living in rural areas with our current lifestyle incurrs a lot of societal costs in terms of pollution and infrastucture expenses. Rural development uses more land. Rural areas create more transportation costs, most indirect causes of which are born disproportunately by urbanitees. I could go on. In short, EVERYONE pays for those expenses, NOT just the folks living out in rural areas. It is not only unfair to ask urban dwellers to finance these inequities, it also creates an artificial incentive to develop rural areas and encroach on natural preserves.

It's bad policy. For phone and electric, I'm willing to hold keep my peace and underwrite expensive outlays to rural areas-- these are necessities, and I'm willing to take a hit so that other people can have those necessities. But to incurr those costs for entertainment seems a bit much-- particularly since for broadband and TV, viable alternatives do, in fact, exist. Sure, there aren't as many choices, but that applies to everything out in the country, from everything from stores to restuarants to places of worship.

Why should broadband/TV access be any different?

Re:This IS A Good Thing!!

[Phoobarnvaz]

Local governments still have the authority to say "NO!" If the local government does not like the telecoms plan, the plan can be killed in entirety. No foul, No gain! Other businesses have the privilege of deciding where to do business and open/close stores. Telecoms deserve the same right! Resources should not be wasted on installations that cannot be profitable, or at least break even!

If this is the case...I demand the Congress IMMEDIATELY repeal the USF. Since the telecoms will no longer be required to service areas where they don't break even or even make a profit...no one needs to pay this boondoggle any longer. Still irritates me that I have been required to pay it...even when I use VOIP with an out of area phone number!!!

Welcome to Rural America

[macdaddy]

Apparently you've never lived in a rural environment. You know, rural, like 99.99% of the United States. I can't close my eyes, and throw a rock in any direction and hit a McD's or a Starbucks. I can't walk to work and carry my groceries home at night for that one meal. I now live in a town of about 350k people. I work in a town of about 2100 people. You probably have more people living in your city than in my entire state. My home town had 231 people in it in the 2000 census. My 6th grade class had 5 kids in it, all boys. My high school graduating class had 32 people in it. My high school was made up of about 15 small rural communities. I live here in the heartland, smack dab in the dead center of this country. You know, the "World's Bread Basket." We feed you! How about we turn off your food supply. If you want my food, move to a place where I offer it, or buy someone else's food. Simple as that. Jackass.

There are certain necessities in life, staples if you will, that are the building blocks of society and everyday life. Without regulation many utility companies would ignore the majority of the US and focus solely on the areas with the highest concentration of people, primarily the seaboards. Without regulation costs of delivery services to these areas would be levied solely on the shoulders of those in rural America. Why should my fuel cost me $10/gallon when your's only costs you $2/gallon? Regulations spread the load out evenly across all members of our society. Without regulation the country couldn't maintain a balance between producers and consumers. Without balance you consumers die. It's a simple as that.

Before anyone goes off on a rant about me being a Republican or a Bush ass-kisser let me kick that in the nuts right now and say I am a Liberal.

Re:And in that time

[Dun Malg]

computers went from 1MHz costing $5000+ to 33MHz costing $2000+ and now 3GHz at $1000.

Cable: 1,000 x faster and about the same price
Computers: 3,000x faster and 1/5 the price

NOTE: digital telecoms infrastructure speed depends on the speed of the hardware not the cabling, so the speed should scale with the speed of comuters. You're an idiot. Bandwidth is not merely limited by how fast you can toggle a bloody transistor. And while we all can have an example of the fastest existing PC on our desk, we can't all have the fastest existing network connection because it's a shared resource.

FUSF?

[dex22]

If the telcos no longer have to service poorer or more remote or inconvenient areas, does that mean they will no longer receive Federal Universal Service Fund payments?

Does that mean I can keep my FUSF fees?

Of course not. Gah.

Fairweather federalism...

[Rotten168]

Unfortunately, both parties only support federalism and the 10th amendment when it suits their interests.

Why I can't get Verizon FIOS IPTV

[glennrrr]

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.

Cherries

[alanjstr]

So a company wants to be profitable and everyone gets mad. This isn't about them not serving those remote areas at all; they already do that. They just want to deploy fiber to the areas that are most likely to pay for it. Also, some municipalities take more than a year to decide whether the telcos can deploy fiber. That means that YOU are waiting for more competition for more than a year.

So why should I, the consumer, suffer?

quite the blanket assertion

[sethawoolley]

You're asserting that governments can't "make money". I presume you mean they can't "make capital". But, they can. They make capital all the time. If you meant they can't "make value", under what theory of value are you assuming they can't make value? The labor theory? What theory? Come on? The CCC didn't make labor and thus make value?

Wow, you really are deluded, or you just don't know the terminology. You call yourself an Economist?

I include investors who invest via a representative. Even if they could match an institutional investor's baseline, the fees they charge are exorbitant and skim much of the profit out.