BroadBand, Wifi, Wireless, Cable, Telecomm, VoIP, IPTV etc– US needs BETTER Policy
A nice, but misguided friend, Bill Simon of the Political Vine, sent me this link recently, since he hears me ranting about Net Neutrality all the time. The article, from Americans for Prosperity, which is a group that Bill has interfaced with, trots out all the same tired Telecomm Rhetoric that Hands Off The Internet has been espousing since the FCC turned dsl into an “information service”, effectively killing net neutrality. These “free market” arguments are all wrong. “Market Forces” only work to ensure Net Neutrality in the absense of regulation when there is true competition, and the Telecomm and Cable/Media lobbies have lobbied hard to make sure that any regulation that creates competition has been stomped flat ASAP. The Telecomm and Cable/Media Companies only want regulations that favor them, and will go to any lengths to keep the government from killing the goose that’s laying their golden eggs. As Harold at WetMachine so succinctly put it in talking about the upcoming spectrum auction, “Man, Telco spying for NSA is just the gift that keeps on giving. First the Bush Justice Department behaves like a nice little lap doggie and rolls over and plays dead for AT&T buying BellSouth. Then Bush tried to give the Bells retroactive immunity for what they did. Now, according to rumor, Bush will help the telcos rig the (spectrum) auction to keep the status quo.”
Meanwhile, France is BEATING OUR BUTT on Broadband Rollout, Speed, Cost and Competition. How are they doing this? They instituted a policy of Local Loop Unbundling, which effectively turns their Telecomm into a wholesaler. The result is not only an astounding amount of healthy competition, Broadband Fiber Rollout by the wholesaler, and exceptional speed and services at considerably lower prices than the US, but it’s also resulting in the infant companies who are buying wholesale access to the local loop to start rolling out their own fiber networks. Wow. A country where fiber is actually being deployed instead of just promised over and over and over again. And the fiber being rolled out is being paid for by the companies rolling it out, not by their taxpayers. Even better, their “bundled” services include VOIP! According to the article in Business Week, “Paris and other cities are plastered with ads for state-of-the-art home Internet gateways—with names like Livebox, Freebox, Neufbox, and Dartybox—that offer connection speeds of up to 28 megabits per second, plus voice calls, TV, and Wi-Fi. They usually come for free with a monthly broadband subscription starting around €30 ($41).”
Do you know that the US used to have Local Loop Unbundling? That’s when the Internet was born and subsequently exploded, with a proliferation of innovation and company startups unseen since. But, according to Business Week, we bungled it, and now we’re 15th in broadband deployment and falling. From the article:
U.S. Bungles “Unbundling”
Of course, the U.S. also implemented local loop unbundling, but it didn’t work as well. Powerful incumbent telecoms such as SBC Communications (T) fought the measures and did everything they could to stall. They also persuaded state telecom regulators to set wholesale rates for “unbundled” DSL lines that were so high that rivals couldn’t survive on the resulting meager profit margins. Eventually that led to the demise of alternative providers such as Northpoint Communications and Rhythms NetConnections.
The FCC also was at war over the best way to spur competition. Many policymakers favored an approach known as “facilities-based competition,” which pitted telecoms against cable companies, in the belief that encouraging construction of multiple networks was better in the long run for competition than encouraging rival services running over a single infrastructure. But as DSL startups have died off, many U.S. communities are left with a cable-telecom duopoly, with limited innovation and price competition.
Former FCC chairman Reed Hundt recalls that when he began implementing local loop unbundling after the 1996 Telecommunications Act, The Wall Street Journal called him a “French bureaucrat” in an editorial. “It’s the worst thing they think anyone can be called,” Hundt says with a laugh. “But the French must have assumed it was a compliment because they looked at what we were doing and copied it.”
Strong Competition Leads to Innovation
Five years later, the FCC changed course in favor of facilities-based competition, but the French, who have a more limited cable infrastructure, stuck with unbundling. “Now it looks like French bureaucrats are the most pro-innovation regulators in the world,” Hundt quips.
The ironic windfall is that France’s DSL rivals are now strong enough that they can start weaning themselves off of France Telecom’s network and build their own—the regulatory nirvana of facilities-based competition. Iliad, for instance, announced last year that it would start rolling out its own fiber links to subscriber homes in France. So did Neuf Cegetal (NEUF.PA), another broadband entrant. Now France Telecom is following suit.
In figuring out how to best recreate the US broadband policy, we need to look at the harm the FCC has caused in the past by the choices they’ve made, and correct the direction we’ll take in the future. We need to avoid past mistakes, like the ones illuminated in David Weinberger’s analysis, entitled Delamination Now! How to keep the internet from going the way of the Princess Phone. We need to look at the WHOLE picture– Broadband internet access, IPTV, Cable, Wireless, Wifi, VoIP, Telephony, etc. not as separate entities, but as pieces of a broader puzzle that need to be fitted together the way they have been in France. And, most importantly, we need the FCC to construct the Spectrum Auction Rules to take all these disparate elements into consideration and realize that they’ve got some ’splaining to do if they screw it up this time the way they’ve repeatedly done in the past.
Now, with auction rules being formulated as we speak, AT&T is threatening to sue the FCC and keep the auction from happening if the rules are changed to their disadvantage. They’ve also said that changing the rules to ensure open access to that spectrum will hurt auction revenue, which Congress is counting on to wipe out a significant portion of the budget deficit. This is patently untrue, as Harold Feld pointed out recently, “. . . the ”Nextwave PCS“ auction of 2000. This was the last auction conducted with spectrum caps in place. That is to say, that incumbents were limited in how much spectrum they could acquire, leaving over licenses for new entrants. That auction gave a return of $4 Mhz/pop. (MHz/pop is the standard way to measure value of licenses. It is the license divided by the population of the area covered by the license.) The most recent comparable auction, last summer’s AWS auction, fetched 53 cents per MHz/pop.” The most recent auction’s rules favored the Telecomms and, because bidding wasn’t anonymous, allowed incumbents to signal each other. BIG difference in revenue, so it would seem that AT&T is blowing broadband smoke again, as they also did when OECD data showed how badly the US is doing in broadband, and they responded by attacking the OECD data with more lies and bullshit.
I am begging you, FCC and Congress! Get our Communications Policy right this time!
Technorati Tags: broadband, wifi, wireless, cable, telecomm, voip iptv, net neutrality, spectrum auction, france broadband, at&t, fcc, congress, local loop unbundling
07/29/07, 12:16 AM |
Excellent analysis, especially the segment explaining the context and the currents in France vis a vis the U.S.
07/29/07, 8:05 AM |
Thanks Jon!
I’m sure all of us following Senator Durbin’s Experiment in Internet Democracy see how the people in the know re Telecomm/Spectrum policy feel. This whole issue has been mishandled for way too long, which brings up the other big issue– campaign finance and lobbying reform!