Telcos Want Big Subsidies, Not Line-Sharing

It seems that a recent survey of global broadband practices by Harvard's Berkman Center at the behest of the FCC has stirred the telecommunications hornet's nest. Both AT&T and Verizon are up in arms about some of the conclusions (except the ones that suggest offering large direct public subsidies). "Harvard's Berkman Center study of global broadband practices, produced at the FCC's request, is an 'embarrassingly slanted econometric analysis that violates professional statistical standards and is insufficiently reliable to provide meaningful guidance,' declares AT&T. The study does nothing but promote the lead author's 'own extreme views,' warns a response from Verizon Wireless. Most importantly, it 'should not be relied upon by the FCC in formulating a National Broadband Plan,' concludes the United States Telecom Association. Reviewing the slew of criticisms, Berkman's blog wryly notes that the report seems to have been 'a mini stimulus act for telecommunications lawyers and consultants.'"

Comments

More competition needed

[Maximum Prophet]

Verizon notes, open access and unbundling would be a bad policy for the United States, largely because of the rural nature of much of the country. "The problem in these rural and low-density areas is that they have been unable to attract even a single entrant," the telco argues. "Imposing unbundling will not only fail to solve this problem, but will only make things worse: if the economics do not currently support a single provider, they are even less likely to support multiple(and potentially an unlimited number of) providers."

I'm not sure that you can have worse service than no service. There are many areas that only allow one (or a few) providers. If that one provider chooses not to give service to a part of it's service area, those people are screwed. Maximum innovation will come from maximum competition. It's called capitalism, but it always seemed to me that capitalists usually want the least amount of competition possible.

Re:More competition needed

[dkleinsc]

Why not more regulation?

Telecom is by all appearances a natural monopoly, like other utilities. If you take AT&T and Verizon and break them up into little pieces, in about 15 years you'll be right back to where we are now in this market. We know this because we tried breaking up Ma Bell, and within about 15 years we were back to an oligopoly (and probably would have been back to a monopoly had the FCC and FTC allowed it).

The ways to handle utilities, in order of my preference at least, based on the experiences of residents where each of these are applied:
1. Publicly owned and operated: This isn't perfect, but by all appearances can do a really good job. When was the last time you thought about your municipal water and sewer service? That's the sign of a well-run utility.
2. Heavily regulated monopoly: This is the electricity market in a lot of places. Again, far from perfect, but customers generally aren't bilked and service is usually pretty decent.
3. Less regulated oligopoly: This can be decidedly unpleasant if the various players realize that they can earn more by both of them bilking their customers rather than trying to take market share away from each other. The regulations can help prevent problems, but are generally less extensive than the regulated monopoly.
4. "Free-market" free-for-all: Think California during the electric deregulation. This typically is really an unregulated oligopoly.
5. Unregulated monopoly: Standard Oil et al. Typically, the monopoly makes a huge bundle of cash while all the customers (who often have little choice but to pay) get bilked.

Right now, telecommunications is sitting at option 3. AT&T and Verizon would both love option 4, and whichever one is capable of buying out the other would really really like option 5, but for the purposes of serving customers you're typically better off with option 1 or 2.

Re:I see what they did there...

[Zerth]

We already did that once and I've got relatives that still only get 9600 on dialup, no chance at DSL, and they live in a town with 1200+ people/sq mi, if only 10,000 or so people.

They'll take the money, kick out a fat dividend, and then spin off a paper company with the responsibilities, destined to fold.