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Oregon judge rules AT&T must open cables
Cygnus v1 writes "This story on ZDNN gives some hope to those of us waiting for our local cable companies to get on the Internet-access bandwagon now or let third parties do the work. A Portland judge ruled that AT&T, who owns a local cable network, must allow third-party ISPs to do business over their network for a fee. Some argue that AT&T's rights are being violated, but I believe that since most of the cable infrastructure was installed in cooperation with local authorities they have some right to determine how the utility will be best able to serve the public. "
If you think that open access is such a public good, then you should lobby for the government to provide socialized bandwidth paid for by tax dollars. It is simply ridiculous to make a private company take 100% of the risk of failure on an infrastructure project while letting everyone else participate in the upside if it succeeds.
That's an interesting point. Local monopolies and state regulation was actually sought by the utilities themselves. AT&T in particular was glad to trade a little regulation for monopoly status at the turn of the century. They were very effective at manipulating the regulators and earning above market returns. Most people think that governments acted to restrain greedy corporations when in fact the corporations themselves manipulated the process for their own gain.
wrt the history of telephone regulation, the Cato Institute (a libertarian think tank) has a paper someplace that talks about how AT&T did this.
Access lines are end user telephone connections. The LD companies control virtually none of that. LD prices are way down. I pay 9 cents a minute 24 hours a day. Ameritech (my local phone company) charges 8 cents a minute for a 15 mile call within the Chicago area - 19 cents a minute if it goes to Indiana! That's the real monopoly. And even the 9 cents would be a lot cheaper if 20-40% of it weren't going to the local telephone monopolies as access charges.
Does AT&T have a contractual monopoly in Portland? Most modern franchise agreements are non-exclusive. If a municipality is stupid enough to sign an exclusive one, that is their fault. There are lots of competitive cable companies out there. Plus there is satellite if there isn't one. (I think a few million people actually have those 18" dishes now). Cable companies have competition in every market/line of business they serve.
The editorial comment accompanying this piece is just wrong. The cable infrastructure was not installed "in cooperation" with the local government. It was installed 100% by the cable company. In fact the only role of the local government was to extort franchise fees and free cable access channels out of the cable company.
This "open access" provision is simply a sop to AOL, which is a multi-mega-billion dollar company that could easily afford to invest in its own infrastructure if it desired. Indeed, Microsoft has done this by investing billions in cable companies. AOL just wants a free ride. It want AT&T to spend billions to replace their old cable infrastructure with new high capacity data grade fiber and then sell access to them at wholesale prices. Of course if cable modems flop or are destroyed by DSL, AOL will lose nothing and AT&T will be left holding the bag. How fair is this? AOL wants the upside for themselves and the downside for AT&T.
People will say that phone companies are required to resell access to all comers, which is true. Cable is a vastly different animal for many reasons which I've outlined before but will be happy to do so again if people need a refresher.
BTW: I do not work for AT&T or any other cable company or ISP.
Most cable contracts are NOT exclusive these days. The franchise agreement only gives the cable company access to public rights of way. Many, many communities have granted competitive cable franchises. Here in Chicago Ameritech has many competitive franchises in the suburbs and a company called 21st Century is wiring most of the north lakefront with competitive cable.
Posted by Mike@ABC:
Word is that the FCC is thinking of similar measures as they go about approving AT&T's other cable purchases. The thinking is that if AT&T can build enough of a private network, they could exercise monopoly power for the first time since the Baby Bell breakup.
Oregon's just ahead of the curve on this one. And really, it won't matter much to AT&T. Sure, if they have a proprietary network that no one else can access, they have all that revenue from the captive audience. But if they have to open up the network to third parties, they have all that leasing revenue.
Either way, they have a lot of revenue. So don't cry for AT&T. They'll do just fine either way. Just make sure they're providing the services that people want and need.
Posted by Mike@ABC:
Maybe....but consider that AT&T doesn't have a monopoly yet. If they fail to learn from the RBOCs' (Regional Bell Operating Companies) mistakes, then they deserve to be screwed on their lease costs.
But AT&T has a smart management team. I think they'll be able to cut themselves a much better leasing deal than the Bells did, and the revenue will cover at least the maintenance costs, if not more.
On the other hand, my crystal ball's in the shop, so who knows? We'll see how it plays out.
Lubbock is, to the best of my knowledge, the only spot in the US that still has competing power companies. Not the California-style provider selection/deregulation, but two separate grids & sets of wires.
:)
Is it coincidence that they also have lower power rates than comparable areas? (supposedly, you can chart the increase in rates as a function of distance from Lubbock).
Similar things happen with cable. It is now illegal to grant a monopoly franchise. Guess who gets better prices & service, towns with multiple providers or towns with just one?
My father in law waited years for cable in a rural area. The county granted a second franchise, and the first cable company finally called, offering to install it the next week. For some reason, he said no, and called the second
First, the cable infrastructure isn't there yet. It's possible that your local cable company isn't offering internet access because they're an evil monopoly. But it's more likely because they have a old one-way network which would require significant upgrades. Significant COSTLY upgrades. Before there's any incentive to actually do so, there has to be some guarantee that it's going to be worthwhile. Now, it looks like as soon as they've got it built, AOL will zip in and steal customers. Great. So your local cable company is now much less likely to bother with the necessary upgrades.
Second, this is going to add a lot of costs. Right now, the cable 'net companies basically have private networks, and all the existing infrastructure was designed with that in mind. How is this change going to be implemented? Multiple different DHCP servers? Complicated routers and filters to determine whose traffic goes where? Will the alternate providers share the same upstream bandwidth?
The other possiblity is that there will be no actual changes to the network -- you'll just get a different home page and your bill will come from a different company.
Which brings me to my final point: this doesn't benefit high-end users in any way. If it's just a matter of changed home page, that might be exciting for AOL people with no clue, but otherwise isn't even interesting.
And if it is a matter of actually providing seperate IP services, what would you gain? I have MediaOne RR, and they have plenty of upstream bandwidth and good outside-world connectivity. I've never had problems, but people who have complaints usually are complaining about their connection the M1's network -- not the internet at large. So with an alternate provider, you still might have these problems, but probably you wouldn't be able to contact tech support directly -- you'd have to go through your provider, who would talk to the actual cable people. The other potential problem with cable internet is overloaded shared nodes -- again, not something that's helped by alternate providers.
And of course, this is very unlikely to actually cause cable internet to become available where it isn't already.
In a few years, the situation will be different,
with more infrastructure in place and wider competition from DSL. At that point, this should be re-evaluated. For now, it's not any good for anyone except AOL.
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This is a typical example of the government getting involved where it shouldn't.
Its one thing for the government to require competitive access to a company's network if that network's installation was subsidized by the government. Requiring a telco to share its lines with CLEC's and things like that is okay -- because taxes payed for a lot of the copper.
There's not a dime of government money that goes to pay for these networks. ATT payed for it, ATT should be able to do whatever they please with it.
Now, I live in an area where my cable company has upgraded their system to fiber. I can get digital cable and all that. But no Internet access. None planned (so they're saying.) Would it be nice if another company could force Comcast to open their lines so I can get it through them? Yes. Certainly. But if Comcast knows BEFORE putting the network in that they have to do that, and can't recoup the costs of the upgrade, why would they do it?
Sure, digital cable is a nice plus, but there's no competition here or in most of the country for cable service. They upgraded the system because of the added services BEYOND cable they can offer. Initially those will probably be more pay-per-view channels and the like, and someday will be Internet access and other stuff.
Local telephone service has been a charity most of the century. Cable isn't. Unless the government is going to subsidize these networks and regulate the industry again, how can anyone expect a ruling like this to help the majority of the country that hasn't gotten upgraded networks?
"If there is one place that should have a monopoly standing is the cable/telephone/electrical wire infrastructures. Otherwise we would have wires all over the place."
Much of the regulatory structure we have in place today (in the US of A) stems from exactly that fact. Go back and look at some pictures of the electrified areas of New York City in the 1890's - poles, wires, insulators, and ditches everywhere. In some places the wires were so thick you couldn't see the sky. Or read some accounts of the growth of the underground cable networks in NY, Boston, and Chicago - utility crews digging up streets in the middle of the night, and battling it out with pickhandles when they met crews from competing utilities.
Finally the residents and business owners got fed up with these goings on, and this is one of the reasons monopoly right-of-ways were granted (yes, I know there were other reasons {not least the desire of the big bosses to grab, I mean tax} and that this is oversimplified). I would absolutely like to see competition in cable and telephone service, right down to the infrastructure. But I _don't_ want 20 cables on the pole behind my house, and I suspect most people don't want that either.
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The Oregon court has made a very smart, forward looking decision. It is absolutely critical that ISPs have access to both the Cable and DSL infrastructure. Bell and the rest of them dream of the day that they will *force* their cable and dsl subscribers to look at _their_ portal ... and _their_ ads. They will force everyone through _their_ proxy server. They will choose what sorts of email servers they will support. And which sort of IP packets they will let through.
It is important that people wake up and realize the value of competition. Persons using dial-up access now have CHOICE. If you don't like your ISP, you can choose one of the other 15 that service your area. This competition has resulted in improved service, as each ISP strives to add the bullet points that another ISP may currently have and to fix problems that may be causing customers to complain.
Local Loop (the physical medium that connects a home or business to an ISP) and the IP Services provided by the ISP are two different animals. Bell is using their monopoly on the one (high speed local loop) to gain a monopoly on the other (IP Services.)
Let's hope that other states follow the lead of Oregon.
I don't understand where the monopoly-defenders are coming from on this issue.
...), and this is exactly what cable should be like too -- at least the data portion.
For starters, the local government most certainly has the right to ask for this, since cable companies work for the interests of the municipality, which is why they were originally granted local monopolies. Especially in the absence of an FCC ruling, I'm glad to see that there are leading-edge communities trying to define the new era before it gets built at the pleasure of the corporations.
And make no mistake -- AT&T would love to have this monopoly. Not only would they own the only big pipe to your house, you would have no choice but to use their designated ISP/portal. You would be limited as a consumer to choosing what's already connected to your house -- or who's built into your neighborhood. This is the dream of the new "content monopolies" -- own the pipe, own the website, own the music, own the TV shows. No thanks!
I want the pipeline provider to be a utility, and the content providers to be in lively competition. This is exactly what phone service is like (yes, Aaron
Lots of people don't realize how incestuous the phone industry is, in secret. Go to telco A and say "I want a T1 to Fargo", and telco A says sure! But maybe telco A doesn't actually own a land line to Fargo. No problem -- they strike a wholesale deal with telco B, who does, and sell you that T1 just as if it were their own. Telcos are flexible like this only because they don't sell you content. It has nothing to do with infrastructure issues or who pays for what -- because the lease fees cover it in the end.
The only reason somebody like AT&T wants a monopoly on cable, when they don't on phones, is because they want to sell you their content. Or, put more correctly, they want to sell you to advertisers just like a TV station or other mass medium. The debate being sidetracked by equipment issues is good for them because it obscures the content angle. The content angle -- selling audiences -- is how they expect to win the lottery when the dust settles. Don't let them lock in audiences given them in a monopoly phase when they offer no benefit in return! Don't let them give you 500 cable channels -- that they all own (see, that's another thing they're trying to circumvent). Make 'em compete with the rest.
Of course, there is a Devil's Advocate position here. Cable monopolies are GOOD for DSL! If there's a monopoly like AT&T wants, then the reduced incentive to build a new cable plant will increase the incentive to build DSL access onto the existing phone network -- which is already regulatorily welcoming. (Since I side with DSL over cable, I like this, but that's just me.)
lake effect weblog
{Network engineer in Chicago--looking for work!}
I agree with you that a business should aim to be so good that no one else can compete. However, I don't see how AT&T forcing subscribers to buy from @Home only is really doing that. If @Home is so great, AT&T should allow subscribers to pick any ISP that they want, and @Home will end up with all the business. It seems to me that AT&T wants to build a monopoly the wrong way - not by providing better products, but by restricting consumer choice. There are good monopolies and bad monopolies, and it seems that AT&T would like to become a bad one.
Your right to not believe: Americans United for Separation of Church and
If you look closely on each pole, you will see a metal tag. This tag identifies the owner. Usually, whatever service an area needs first determines the owner - eg if the electric company comes in first, they put up the poles. All other users of that pole pay rent for using it - including the local fire department (those red cross bars on the pole). After a storm or accident, which ever utility gets there first, replaces the pole. After a major storm, the utilities often coordinate who works in which area, depending on who has what resources available where. There are even times when the town will replace the pole - some towns have their own power company, others have their own cable companies.
Today, that also holds true for both electric lines and telephone lines. If there are more than one supplier in the area sharing distribution lines, they may each be paying rent (or access fees) to the other for one batch of lines and collecting for another.
As for who owns the lines in the first place, the cable franchises were given exclusive rights to provide service to the town for a specified length of time in exchenge for wiring the town. At the expiration of that time period, most contracts specify that the town owns the rights to the cable if the contract is not renewed.
The main issue I have with your post is right here:
- "The cable infrastructure was not installed "in cooperation" with the local government. It was installed 100% by the cable company. In fact the only role of the local government was to extort franchise fees and free cable access channels out of the cable company.
You only missed one thing. For many, many years, TCI and many other cable companies paid local governments literally billions of dollars to insure that there would NOT be competition within a given municipality, thus preserving high profit margins for extremely poor service. (I should know, I lived in several TCI only cities where customers were treated like dirt.)Secondarily, the reason ATT bought TCI and other cable companies is only partly related to Internet Service. It's also the only way they could get back into the (currently) more lucrative side of the telco industry --local phone service after the breakup that created the RBOC (Regional Bell Operating Companies). Without the ground local loop, ATT's wireless doesn't stand a chance against the Sprint PCS and Ameritechs. So ATT had to do something just to survive, and buying the right of way and copper for the cable systems was the method they chose.
Now then, I'm not a great defender of AO-(HEL)L, either, because of their complicity with Microsoft in taking Netscape down, and their own poor service record. But I think this judge's decision is good for all of us in the long run, because if it sticks, more communities will follow suit, and that will ultimately bring high speed line access to more of us at non-monopoly controlled prices.
...Open Source isn't the only answer -- but it's almost always a better value than the alternatives...
As a TCI@Home user I am quite pleased with the ruling. @Home has totally mismanaged things in my area. Packet losses of over 20% are not unusual. The mail server frequently crashes, and their tech support is totally unacceptable.
It takes over 3 weeks to get a response from a technical question sent via Email, and hold times on the phone are measured in hours.
What really makes me mad is the fact that @Home spends billions on companies like Excite, yet their internal infrastructure is totally inadequate. @Home is trying to become another AOL. I don't want AOL, I want a high speed Internet connection.
Not only that, but my rates have gone up while my bandwidth has been capped.
I have been an @Home user for 2 1/2 years, and during the last year the service has gone to hell. When I first joined, there were no hold times for tech support. The tech support people were sharp and knew what they were talking about. The performance was excellent. The uptime was excellent. They sent out email telling us ahead of time about downtime. They also emailed us our monthly billing info.
Today the only email I get from @Home is spam. I don't get a monthly bill from them (except on my credit card). Downtime is never preannounced, and tech support always responds by saying "Clear the cache in your browser" as if that will fix the 20% packet loss.
Oh, the packet loss is not caused by my connection to the cable company. The packet losses are due to the fact that @Home has inadequate bandwidth to the rest of the internet. The packets are always lost as soon as traffic leaves the 172.16.x.x routers.
This post is encrypted twice with ROT-13. Documenting or attempting to crack this encryption is illegal.
Of course, this ruling will be appealed like mad. It probably should be. If AT&T has to open up the cable infrastructure it paid millions for, what incentive does the company have to upgrade that infrastructure to control for bandwidth-sharing problems that WILL happen on cable networks as more people get cable modems?
Remember, Cable is a little like Ethernet, it's a shared medium. If everyone gets a cable modem, or even, say, half the houses in a neighborhood, you could be logging in at the same speed as your modem. There is NO incentive to upgrade the plant so it's always faster than a modem if AT&T has to both amortize the purchase price of TCI/Media One AND open the networks to competitors. It's not like the Bells, who have had ~50 years to amortize the initial construction costs and ~15 years to amortize the upgrade costs after the breakup of AT&T.
IMHO, the government/state PUCs should negotiate a 5-year deal whereby AT&T (or any cable company willing to upgrade their cable plant) gets 5 years of monopoly over its cable networks, and after that is required to open 'em up to competitors. AT&T ought to be able to recoup the upgrade costs through 5-years of monopoly rents, and in the end we all benefit from both competition and better access. There is precedent with the various AT&T-FCC agreements of the past 65 years as well as the MFJ (the agreemen which broke up the Bell System).
Just how I see it.