Say goodbye to Speakeasy

[richb at pioneer.ci.net (Rich Braun)]

Jerry Feldman <gaf at blu.org> wrote:
> ... Speakeasy, Earthlink, and AOL among
> others could be frozen out. But, this also leaves them open to state
> and local regulation. We'll see how the broadband operators (eg. cable
> and phone companies) react to this

State & local regulators now have their hands tied in the only meaningful
sense:  they can no longer control the prices or terms of contracts between
providers of "information" services and the utility companies which own the
physical wires.

Jack Coats <jack at coats.org> wrote:
> I got Covad.  They contracted with SWBell for a line
> and ran DSL over it.  ...  I don't see why other ISPs could't do the same.

Well I gave it a go as an ISP manager a few years ago.  I (er, my employer)
had contracts with Covad, Northpoint, and Verizon (BA in those days).  This
was before so-called line-sharing, so Verizon rivals Covad/Northpoint had to
provide service over a dedicated dry copper pair.  Verizon had two clear
advantages:  it didn't need to run a separate wire for DSL, and it could
invest the effort to test ALL of its existing phone wires for DSL
compatibility prior to launching service in a given geographic area.

The cable companies have an even bigger advantage:  the DOCSIS test laboratory
and its rigid standards which enable border-to-border service coverage at a
fixed data rate (one that is substantially higher than any DSL technology).

The bottom line is that line-sharing is far more efficient, cost-wise, than
any service which requires ordering a new, separate wire for each customer at
order time.  Dry copper is not scalable unless you're building a brand new
network.  Reselling line-shared service from Verizon is not viable; gross
margins are in the 5% range vs. the 40% or so you'd need to operate a viable
service with 24/7 monitoring.  If you're working with local regulators to
build a brand new network, you'd be crazy to invest in DSL technology:  fiber,
DOCSIS, or wireless are the only practical methods of laying new Internet
infrastructure.

Jerry again:
>  But, the local physical
> lines are regulated by both the states and the communities. That is one
> reason why there is a community public access TV channel on your local
> cable.
>
> I'm sure that AOL, Earthlink, and Speakeasy will find ways to continue
> to offer broadband service.

Local regulators' hands are completely tied, Jerry.  They can't impose taxes
or contractual terms or anything of sort on the big guys to deliver any
community-access or universal-service mandate that you might be trying to
compare with Somerville Community Access Television.

The game's over.  Right-wing corporate interests have gotten what they wanted,
a policy which former FCC chairman Michael Powell was unable to implement on
his watch, and they dressed it up in the usual drivel about how economies of
scale and elimination of competition which drive efficiencies to "benefit" the
consumer.  (Did anyone catch the similar BS argument trotted out last week
when some PR agent claimed that the price of sneakers should be headed down
soon now that Adidas is buying Reebok, claiming that because Target and
Walmart and their ilk can lay off a few purchasing managers now that they
don't have to source product from such a broad array of manufacturers?)

This outcome was never in doubt; the timeframe surprised me though, given that
it took from the telecom act of 1996 (which made competitive DSL possible)
until 2006 for the end-game to play out.  That's such a long time period that
the ultimate impact on consumers has been minimized.  In theory, getting rid
of the Covads and Earthlinks of the world (or rather, forcing them to get out
of the DSL broadband business:  the company names might live on, but they
won't be in the same business) should reduce the impetus for the phone and
cable companies to upgrade their services.  But those rivals never were able
to amass enough capital to build bypass networks of higher quality, so the
technology competition remains the same as it's been for 5 years or so: 
DOCSIS 1.1 at about 38 megabits per network segment vs DSL at about 2 megabits
per subscriber,  with future technologies DOCSIS 2.0 at something like 300
megabits per segment and fiber-to-the-home at a gigabit per segment.  Only the
dancing elephants (Verizon vs. Comcast in our neck of the woods) have the cash
to play this game.

Earthlink, Covad, AOL, Speakeasy are being told to get out of the way of the
big boys, which is something they'd probably have done anyway soon enough.

I still maintain a service provider list
(http://www.ci.net/neci/providers.html) which has a surprising number of
companies remaining on it 11 years into the game.  I figured more of them
would have gone bust or discontinued their access services by now, but a lot
of them are hanging on.  If you work for one of them, I'd love to hear how
things are going.

-rich