Telecoms Suing Municipalities That Plan Broadband Access

Law.com has up a review of ongoing and historical cases of telecoms suing municipalities that plan broadband networks. In many cases those same telecoms have spent years ignoring as potential customers the cities and towns now undertaking Net infrastructure projects, only to turn around and sue them. One lawyer who has defended many municipalities in this position says, "This is similar to electrification a century ago when small towns and rural areas were left behind, so they formed their own authorities." Bob Frankston has been writing for years about the financial model of artificial scarcity that underlies the telecoms businss plans. This post gives some of the background to the telecoms' fear of abundance.

Comments

The government?

[symbolset]

The government? Providing necessary infrastructure companies can't or won't? How dare they!

Re:The government?

[QuantumG]

Yeah, cause its not like these municipalities are trying to say who can use the fiber that they want to build to connect their citizens to the Internet. Oh wait, yes they are. This would be like building a nice new highway, and getting Ford to pay part of the cost, and only allowing people with Fords to drive on it. [Slashdot car analogy at its finest].

Re:The government?

[Anonymous Coward]

OH SHUT UP.

Sanitation is not "necessary infrastructure". Electricity is not "necessary infrastructure". Telephone lines are not "necessary infrastructure". The Amish show all this quite well.

But any modern city requires these things and also requires data transfer. Now, if no company will spend the money, clearly the citizens have the option of doing so themselves. I'd rather see them form a co-op, but whatever, it's their city.

Now, the private sector may not be able to compete with tax subsidized services, but the fact that the private sector does not want to get involved is a pretty clear indication that they can't compete, period. If they're not going to compete, then they need to stay the hell out of the way.

Re:The government?

[whoever57]

Internet access is not "necessary infrastructure".

Isn't it? I think that, with services such as local phone running over the Internet (eg. Vonage), there is a very strong argument that it is a necessary infrastructure. We think of electricity as a necessary infrastructure, yet in the early days many people were without it.

Re:The government?

[Xzzy]

That may have been true 10 years ago, but now? It's the 21st century equivalent of the printing press or TV.

Obviously it's not a required service to survive, but the generation of kids in school right now are building their lives around the existence of the internet, and if those of us in power now don't think it's "necessary", I guarantee you their generation will.

May as well get a jump start on it and make my life easier as well. ;)

Re:The government?

[whoever57]

Internet access is not "necessary infrastructure". Isn't it? I think that, with services such as local phone running over the Internet (eg. Vonage), there is a very strong argument that it is a necessary infrastructure. We think of electricity as a necessary infrastructure, yet in the early days many people were without it.

Vonage? Are you serious? Yeah, let's consider Vonage, one of the most unreliable VoIP providers on the planet, to be a necessary service.

No thanks. I'd rather stick with my switched circuits for reliable service.

Your opinion on the reliability of Vonage has nothing to do with the discussion. Vonage (and other VOIP providers -- I cited Vonage only as an example) provide a local phone service. It is not possible for them to provide this essential service without Internet access.

I notice that elsewhere you responded to another poster with a clear ad-hominem.

And if you think that you get a switched circuit from your local phone provider for anything except perhaps a call to your neighbor, you are just showing your ignorance.

Re:The government?

[Vancorps]

The only thing you stated was circular logic. You did not state why you think it's not a necessity. You only made a generic statement about private industry competing with government.

I think it's pretty easy to make a case that the 21st century economy should include Internet access as a necessity.

In this day and age all my bills are paid online, the yellow pages on paper is a thing of the past and calling internationally is no longer prohibitively expensive. Looking for a new job is next to impossible without being online even.

Yes people can live without the Internet, people can live without phone service and electricity too. How exactly is it not a necessity?

Re:The government?

[nine-times]

We think of electricity as a necessary infrastructure, yet in the early days many people were without it.

Right. For every kind of infrastructure we have, there has been a time when we lived without it. Telephones, electricity, indoor plumbing, roads. In the hunter/gatherer sense of the word "necessary", none of these things are necessary.

However, they're all vital to our economy, and an important factor in the development of our civilization. Having a couple big companies exercise complete control over all allowed infrastructure, and that infrastructure's use, is unacceptable.

Would we hand over construction of our roads to a single private company, allow them to build roads where they want and not build roads elsewhere, and then allow them to arbitrarily decide what kind of traffic is allowed, based solely on what they believe would be most profitable?

Re:The government?

[mabhatter654]

you mean the PUBLIC utilities that ALREADY accepted millions of dollars in tax credits (that's a subsidy!!!!) but didn't deliver the product? Telcos already had their chance, got it paid for with tax money and took the cash.. but didn't deliver when and where they promised Congress.

Re:open access

[TubeSteak]

Municipalities want to pay for fiber to connect them to the metropolis? Fine. But that fiber has to be open for everyone. They don't get to play favorites with the telcos.

Maybe you're confused.

Municipalities want to build out broadband networks and make them the 5th utility, alongside natural gas, heating oil, water, and electricity. The Telcos are suing to prevent Municipalities from doing this.

That's the point

[symbolset]

These areas have no current broadband business serving them and they aren't going to because the margins are higher providing 5mbps to city folk than dragging fiber out to farmer John. That's why rural areas to get broadband at all have to do it themselves.

The thing is in places like sleepy Ephrata, WA they can sell 100mbps broadband for $50/mo through the power district and still make a profit - just not as big of a margin as the telcos are getting.

There is no business there to destroy and there never will be. Comcast and Ma Bell have no intention of serving these folks ever. They just sue to keep other people from doing it to prop up the myth that bandwidth is evpensive. Yeah sure it's expensive if the guy dragging the fiber has to take every corner, valley and river by force from a defending battalion of lawyers.

The internet is the modern post road

[symbolset]

Many government services are provided by Internet. The internet is for many people the only access to modern markets. Internet is essential infrastructure.

These companies have no desire to compete for these markets. Their objective is the prevention of information services to these people. The people are right to be angry. They're also more used to fixing these things themselves.

New business model

[SilverBlade2k]

Just like the RIAA and MPAA, the Telcos would rather sue, then to actually WORK for their money.

Problem with the telcos

[DigitAl56K]

Here is the problem I see with ISPs in general.

You tend to get internet, phone, and TV services from a single provider. Unfortunately, phone services will go away as a revenue stream as people move to VOIP. I know plenty of people who have also canceled their tv service because they only watch a few shows and they prefer to get them online at their convenience. This means that providers loose the revenue attached to phone and tv services right off the bat. Then you have to consider how many big ISPs are also media industry giants and have a vested interest in ensuring you continue to consume media through premium channels and channels laden with advertising. They don't necessarily want you watching things over the net at your convenience. So we have ISPs fighting against P2P claiming "conjestion", while refusing to upgrade their backbone, killing their newsgroup services, and imposing bandwidth caps with costly per gigabyte charges for subscribers who exceed them.

Of course, the ISPs can't afford to lose even these "undesirable" users to a municipality, because as soon as they do they can no longer impose p2p throttling and bandwidth caps as a measure to slow people moving away from their established channels and services, and their content is harder to monetize. So IMHO they're going to fight to keep people locked into a service that they're also working feverishly to lock down to their benefit and the detriment of consumers.

But that's just my $0.02 ..

Re:Problem with the telcos

[nine-times]

You tend to get internet, phone, and TV services from a single provider. Unfortunately, phone services will go away as a revenue stream as people move to VOIP. I know plenty of people who have also canceled their tv service because they only watch a few shows and they prefer to get them online at their convenience. This means that providers loose the revenue attached to phone and tv services right off the bat. Then you have to consider how many big ISPs are also media industry giants and have a vested interest in ensuring you continue to consume media through premium channels and channels laden with advertising.

Yup. It's a problem. People often focus on the problem of limited choices in ISPs-- that your only real choice in a given area is usually "the phone company" or "the cable company"-- but they usually fail to recognize the conflict of interest involved in owning multiple points in the chain. Verizon, for example, is the owner of the infrastructure, the ISP, and the phone service provider. So right off, they aren't going to want VOIP to be successful, but also they don't have much interest in seeing successful alternative ISPs over their own infrastructure.

Cable companies can be even worse. Like with TimeWarner Cable, you have the same problems as Verizon, but substitute "cable TV" for "phone service". But in addition to that, their parent company also owns a bunch of the content being delivered on their TV service. So they own the infrastructure, they're the ISP, they provide a video service, and they provide the video content that they're providing in that service.

Now maybe there's some independence between those functions, but there's still a conflict of interest. As the company building infrastructure, it would normally be in your best interest to build infrastructure everywhere so that you could get paid. As the owner of the infrastructure (if you weren't an ISP) it would be in your interest to foster ISPs and new services who would pay for a variety of uses of that infrastructure, instead of putting all your eggs in one basket. If you were the ISP, anything which made people want access to the internet would be to your advantage. As the video/voice service provider, you'd want the best/fastest network possible. As the content owner, you'd want your content on every possible channel (that makes money for you).

But since these companies basically run the whole supply chain, their interests are different. Building the infrastructure comes out of their own pocket, they don't want to build anything without knowing it'll provide the best ROI, so they don't bother building in lots of places. As the owner of the infrastructure, they want to restrict its use to pushing their own services. As the ISP, their interests are best served by restricting usage, as much as possible, to pushing their own content and services. As video/voice service provider, your interests are served by seeing Internet service being slow outside of a QoS for your own services. As the content owner, you want to restrict your content to channels that you control, and also use those channels to push/advertise your content.

All of this is a bit of an oversimplification, but I still think we would be well-served by breaking some of these functions out into separate companies. Primarily I have in mind that whoever builds/maintains the infrastructure should be forbidden from providing any services on that infrastructure. I admit that I'm not an expert in telecommunications or economics, but it seems reasonable to me.

If it's not possible to build infrastructure by itself, without providing services, then it seems like an argument in favor of a completely public infrastructure.

Re:Bad Idea

[stinerman]

Letting a local government run your Internet is a stupid-bad idea.

I agree.

What isn't a stupid idea is letting a local government build networking infrastructure and then allowing access to anyone who wishes to provide services over the infrastructure.

I won't move to VOIP.

[plasmacutter]

When the power goes out, so does VIOP. Eventually a mobile also has to be charged, and murphy's law states the power will go out on the evening it's due to be charged.

The redundancy offered by self-powered land lines is something which cannot be so readily ignored, at least to me.

Re:open access - "unfair" competition

[davide marney]

See, here's the thing: telcos do not have a "right" to compete for these services. Rights belong to the people, not to private businesses.

The people, through their various branches of government, decide what are the rules and laws under which business can operate. The people, through taxes, fees, and bonds, provides the funding. The people, through our elected representatives, entirely owns the "public" sphere and everything that operates within it.

We are our own sovereign entity. No private enterprise can legitimately claim to "compete" with us; there is no government other than what we have established.

The whole foundation of the telco's argument is built on sand. Something to think about ...

Re:open access

[jc42]

They don't get to play favorites with the telcos.

And from TFA: ... you can't use your powers as a city to create an uneven playing field,"

This is a nonsensical argument. Nearly everywhere, the municipalities, states, and all other levels of government always "play favorites" and create an "uneven playing field". They do this by creating and enforcing local telecom monopolies.

Where I live, the phone line leading to my house is owned by Verizon, and it's illegal for any competitor to install a competing line. This is about as much an uneven playing field as you can imagine. The town has exactly one favorite phone company, and the others aren't allowed to install their wires in this neighborhood.

Cable is similar, though our neighborhood is a bit unusual in that there are two companies that are legally permitted to install their cables. But a "duopoly" isn't all that much better than a monopoly. (And the "competition" between phone and cable companies does little to alleviate these mon/duopolies.)

Also, here in the US, and in most other companies, the phone companies have received all sorts of subsidies from the national government. If I'd tried to start my own phone company, I'd have had no access to those subsidies. And even with regulations allowing my startup to use the phone company's (copper) wires, they can charge me so much that I can't price my services competitively with theirs.

How do people get off arguing that municipalities shouldn't play favorites to create an uneven playing field, when for over a century, all levels of government have been doing exactly that to create and enforce the telecom monopolies that we see everywhere?