Finally some common sense with regards to net neutrality. These economists are saying that, like most things, if the government regulates the Internet, then it will actually hurt the people it is trying to protect. “If it ain’t broke, don’t fix it.” Net neutrality is truly a bipartisan issue with Democrats and Republicans both for and against it. There are several forces at work here that are pushing net neutrality. There are the content providers that are neophytes at lobbying who are trying to manipulate the market to protect themselves. They do not realize that the law of unintended consequences can come back to bite them in the backside. Then there is the FCC that is going with the meme of the current administration to expand governmental powers. This is a strange power struggle where the “bad guys” are really the “good guys” and vice versa, but for all the wrong reasons. You have to read this article carefully realize that these economists support the no regulation net neutrality that the Internet originally enjoyed.
Mytheos Holt, Reporter-Researcher, BroadbandBreakfast.com
WASHINGTON, July 9, 2010 – Four economists argued in a letter to the FCC sent Wednesday that the question before the agency was “not whether to impose network neutrality, but whether to eliminate it.”
They responded to a letter also sent to the FCC that was drafted by 74 Democratic lawmakers who said the FCC’s plan to impose new regulations on the internet would violate a standing bipartisan consensus about leaving the internet unregulated. The economists argue that, in the aftermath of deregulatory court decisions like the Comcast case, the question is whether to restore what was previously the status quo, not whether to impose new regulation. The court ruled that the FCC did not have the authority to regulate Comcast’s control over the speed that data flows through its networks.
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.
Articles like these are increasingly being written pointing out that lack of true broadband competition is stifling innovation. Cities that have built open-access municipal networks have enjoyed lower pricing and innovative new services. The cost of building that last-mile of fiber is unjustifiable for a public company if they are the only user. Amortize the cost over several service providers and the payback becomes around 5 years which is well within the planning horizon of a city. The incumbents should embrace the use of “other peoples’ money” to offer new and innovative services to increase ARPU.
from the indeed dept
Ryan Single has an excellent piece at Wired that details how incredibly misleading telcos are being in claiming that the FCC’s attempt to reclassify broadband access will lead to less “innovation.” He highlights how far behind other countries the US has fallen, and how hard the telcos seem to work at not competing and not investing in innovation. Basically, Singel points out what many of us have pointed out all along. All of this posturing by telcos is about lowering their own costs (i.e., not investing) and squeezing more money out of customers, in an attempt to please Wall Street:
I agree with the premise of the report that net neutrality as it is currently defined will stifle competition. AT&T has publicly stated that it will halt U-verse deployments if net neutrality is passed. Verizon has already capped its FiOS project. The warning signs are already there. The Internet is a vital component to the U.S. economy as it transitions from a manufacturing-based to knowledge-based economy. Any potential threat to its vitality must be stopped. There are several assumptions in this study that I believe are overstated or flawed. Even if they are corrected, the result will be that as the FCC has defined net neutrality, jobs will be lost in our economy. The Internet must remain open and accessible for all users despite methods of access. On the other hand, the FCC must not be heavy-handed in regulating it as not to impede innovation. All of these points bring me back to my assertion that open-access municipal networks will go a long way to continue the freedom and innovation of the Internet.
Broadband experts warn of depressed network investment, limits on new business models, and deterred rollout of broadband-enabled services
NEW YORK–(BUSINESS WIRE)– According to research released today from Charles M. Davidson, director of The Advanced Communications Law & Policy Institute at New York Law School, and Bret Swanson, president of technology research firm Entropy Economics, new regulations for providers of broadband Internet service could result in the loss of hundreds of thousands of jobs. The new Internet regulations, the report estimates, could also reduce U.S. Gross Domestic Product (GDP) by tens of billions of dollars per year. The report, “Net Neutrality, Investment & Jobs: Assessing the Potential Impacts of the FCC’s Proposed Net Neutrality Rules on the Broadband Ecosystem,” examines the extent of likely damages to investment, jobs, and U.S. GDP resulting from the implementation of the Federal Communications Commission’s (FCC) proposed net neutrality regulations.
Sarah Lai Stirland, Assistant Managing Editor, BroadbandBreakfast.com
NEW YORK, June 10, 2010 – A long-running feud between a municipal utility in Lafayette, La. and Cox Communications appears to have revived itself Wednesday when LUS Fiber filed a lawsuit against the National Cable Television Cooperative. LUS Fiber charges that the cable group is unfairly denying it membership, thus depriving the Lafayette utility from millions of dollars in savings when buying television programming.
The dispute’s worth tracking because LUS Fiber is one of a growing number of municipalities around the country that has built a publicly-financed fiber-to-the-home network, the economics of which are still unproven. The project is being watched closely by others in the telecom industry across the country: An executive from Google’s gigabit-per-second fiber-to-the-home project in April made her only conference trip of the year to visit and inspect LUS Fiber’s 100 megabit-per-second fiber-to-the-home roll-out.
While some rural telcos protest proposed modifications to the Universal Service fund that would support only 4 Mb/s service to the home, one rural telco is moving ahead with plans to deploy a fiber to the home network supporting speeds up to 100 Mb/s service to sparsely populated areas of western Kansas. The deployment is made possible by $101 million in funding through the Broadband Stimulus Program, which was awarded on a 50/50 grant/loan basis to Rural Telephone, a rural ILEC that also has CLEC operations.