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?

[Anonymous Coward]

At one point in our history, electricity wasn't necessary infrastructure either.

Hence the TVA.

I argue that high-speed telecommunications infrastructure is necessary for a 21st-century economy. I'd like to hear your thoughts as to why you believe differently.

Re:The government?

[clang_jangle]

Internet access is not "necessary infrastructure"

Then get the fuck off it and stop clogging our tubes, Ebeneezer!

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?

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.

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:open access

[afidel]

Actually if it wasn't for competitive water and sewer districts in London we probably wouldn't have come about with germ theory nearly as early as we did. You see on of the best pieces of evidence for germ theory came from a actuary working for a London insurance company, he mapped the outbreaks of various fatal diseases and eventually realized that while the deaths often seemed random that given enough outbreaks patterns emerged. When he investigated further the reason that one side of the street had an outbreak and the other not was what water district they were serviced by. This in turn led him to discover that water districts that obtained their water further downstream (and hence downstream from other districts sewer discharge) were more likely to have outbreaks.

Re:open access

[RulerOf]

Yes, and the bits will get from their fiber to the Internet via MAGIC.

No, no, they don't. Those bits would travel to the internet via Peering Agreements with Tier 1 ISP's. Bandwidth that is effectively paid for by the bit. Tier 1 ISP's don't pay eachother to swap data, because each considers traffic from the other to be just as important as its own.

Interestingly enough, if municipalities were to bond together to form a network large and important enough (maybe they could buy a couple /8's from Ford or whoever) to contain enough traffic to meet the absurd "settlement free" peering agreement requirements put forth by the cartel we know as Tier 1 ISP's... now that would be interesting.