[Discuss] Competition of broadband

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

Kyle Leslie wrote:
>> many of the cities signed a contract with Comcast so they
>> would be the only provider of "Broadband" internet

Edward Ned Harvey <blu at nedharvey.com> wrote:
>> This is pretty much the way all broadband is deployed nationwide,
>> and it's done on a per-town or per-city basis.

Hsuanyeh Chang <hsuanyeh at gmail.com> noted:
> If that is the case, then I might be wrong.  But before AT&T was
> pierced apart, how many years have they been running their
> anticompetitive business, nationwide.

Welcome to the rise of the Chicago School of business thought, which boils
down to handing all the marbles to the biggest, most boastful kid with the
expectation that he'll create prosperity for all the rest.

The last-mile wiring got handed to big corporations by the Telecom Act of 1996
and by the Bush-43 administration's FCC policies.  At the time I tracked
roughly 100 New England-area providers of Internet access; almost all of them
have been absorbed into bigger companies or shut down once the major carriers
consolidated control over premises access for dry-pair copper, coax and/or
fiber connections. Attempts to create national companies to create clout in
purchases of dry-pair copper went for naught (Covad, Northpoint were squeezed
out by delaying tactics and database inadequacies by the phone companies --
installation and repairs were an utter nightmare).  Similar efforts to work
with cable companies went nowhere.

Another area where anti-competitive behavior came to play was in the
innovation of wireless gear:  we've all heard about how spectrum has been sold
off by the government to the highest bidder, with obvious consequences for
power of big companies over small ones.  But even before that debacle, big
equipment makers were out buying up and shutting down innovators of
medium-range wireless gear.  WiFi is not practical for deployment over large
geographic areas, a fact which some entrepreneurs and city boosters didn't
really grasp until a lot of sweat & money had been wasted.  Ten to twelve
years ago there were a handful of companies which made gear with ranges of 1
to 15 miles, vastly more practical than WiFi and more comparable to the 3G
gear we see deployed today.  Fastened to the chimney of a house I once owned
in Somerville, you can still see the antenna for one of those gadgets which
brought me home Internet for a brief period back then:  it was line-of-sight
to One Financial Center (the building which symbolically rises over the south
side of today's Occupy Boston site) where one of those little-guy wireless
companies struggled to build a business before folding in the face of the big
guys.

Fixing the industry to create more competition would be remarkably difficult
these days.  My state rep hosted a gathering last night (running in a special
election for state senate) and while our discussion touched on a lot of
things, I didn't bring this one up.  The state has its fingers in the pie only
to provide (minimal) regulatory control over last-mile telephone rates and to
tax telephone poles and tangible assets; cities control telephone pole and
underground conduit locations, and establish contracts for cable-company
products including rates; the feds control spectrum, anti-trust law, carrier
"neutrality" which has become a joke, and interstate carrier connections.

It's common for a big company to buy up and monopolize a piece of spectrum,
creating an artificial shortage, and then to go around to property owners and
write monopolistic contracts controlling all the best antenna and tower
locations.  (Invariably, the company will demand exclusive access:  if a
building owner does business with, e.g., Sprint--the contract will be breached
if the owner signs with, e.g., T-Mobile.)  That's why Verizon's wireless
service works best here, and why no amount of money spent by another company
can ever achieve a truly competitive cell-phone offering.  So Verizon can
charge whatever it wants (optimized, as any monopoly does, to pull in the most
consumers can afford before dropping service entirely), and the prices have
nothing to do with the underlying cost of operations.

In order to reform anything, you'd really need to come up with a
national-level policy like in some other countries.  But in this country I
just don't see an even remotely legal or practical way to accomplish that.

-rich