NoChokePoints Coalition Slams AT&T for Rate Hikes

Last-mile access is about to become a bit more expensive for businesses and wireless carriers.  The real solution here is not more regulation, but competition.  Allow cities and service providers to build their own infrastructure.  Frankly I agree with Frank Simone’s question asking why service providers are not building more fiber access to customers.  The answer is simple.  It is cost prohibitive in most cases.  A carrier could spend more than $10,000 pulling a fiber pair to a building.  They have two options, charge an up-front fee or try to amortize it over a few years.  Most customers will stick with an incumbent carrier rather than pay an up-front fee, and if the carrier amortizes the costs they have no guarantee that the customer will stick with them long enough to make laying the fiber profitable.

I have asked several Tier 2 service providers whether they support municipal broadband networks and they typically state that telecommunications is not a governmental function.  I agree with them, but there is an important difference here.  First of all the government is just leasing last-mile access to the service provider in my model.  They are not actually selling services to customers.  Second I only see these carriers pulling fiber to only the most profitable buildings because of the dilemma I mentioned above.  What about the small independent insurance agent or rural physician that has broadband needs as well?  A few years ago, I worked for a public company with 125 people in a facility and no carrier would bring fiber to our building without a $35,000 initial payment even though fiber ran right down the street we were located.  Perhaps letting the price-cap expire will initiate the deployment of more fiber.

WASHINGTON, June 30, 2010 – AT&T’s special access lines are set for price hikes, and the NoChokePoints Coalition says FCC regulation of this “is essential to the health of our information economy.”

The coalition held a teleconference panel discussion Tuesday to call on the FCC to take action and regulate what it says is a rapidly developing monopoly.

Continue reading