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June 27, 2014 4:49 PM   Subscribe

The US doesn't need network neutrality, it needs competition
posted by indubitable (25 comments total) 9 users marked this as a favorite

 
I don't know much about the ins and outs of allowing competitive access to the local lines. I do know that the lack of competition is a real problem, for everything from cable TV to preferential data treatment to pricing. Until recently, I had exactly one choice for broadband and cable TV. I now have two, and there's virtually no prospect of having a third anytime in the next decade. The two options I have are both megaconglomerates with enormous market power and an incentive to maintain the status quo, competing only at the margins with little true innovation.
posted by maxim0512 at 5:01 PM on June 27


I like the idea of unbundling. But it could easily screw consumers to make everything a la cart (think of paying for 20 podcasts instead of 1 station). So the devil is in the details.

Besides, these are not mutually exclusive. Even with unbundling, we wouldn't want deliberate throttling used as a rentier business model.
posted by mondo dentro at 5:12 PM on June 27 [2 favorites]


How about we get both network neutrality and competition?
posted by Thorzdad at 5:15 PM on June 27 [38 favorites]


Because the market can fix every problem!

Right? Can't it? Guys?
posted by incessant at 5:18 PM on June 27 [5 favorites]


The US broadband situation is much like our healthcare: we pay the most of anyone in the world, get the least results, it sucks, and we think it's great.

Turn it into a well-regulated utility, there's a continent-spanning, shovel-ready project that will never, ever get made because corporations are why we can't have nice things.
posted by fifteen schnitzengruben is my limit at 5:18 PM on June 27 [35 favorites]


There are several points that this article completely glosses over.

1) infrastructure investments
The existing cable internet providers almost all have regional franchise agreements with the municipalities that they service. This provided them with monopolistic markets, but they have to pay the municipality for that monopoly. There is a material investment of cable lines and routers/switches and CO's, all owned and maintained by the cable company. This is their fixed operating cost. If a second cable company were to enter that market, there would be a multi-year construction cost to deploy their own lines, set up their own CO's, and their own network hardware, and their subscriber base will likely be very low and they will be forced to operate at a loss for many many years. This happened already with many of the limited FiOS deployments by Verizon (I'm thinking of Portland, OR in particular) and due to the cost of construction and maintenance, many companies will end up Redlining due to the additional costs of deploying in areas where the expected subscriber bases ability to pay for their services is limited. Google Fiber has been accused in many of it's initial proposals for deployment in many cities of Redlining many areas. Verizon only deployed their FiOS to residential customers in one very small (but wealthy) area of Portland, for this exact reason.

2) Shared carrier agreements
This solution is on it's face laughable, mostly because the lines and equipment that is already deployed was paid for already by the existing franchised monopolies. If you are saying that they should now allow some other company to piggyback on their network without paying through the nose for this, as well as paying a very large chunk of change to upgrade the capacity of the network (not to mention paying for a whole lot more network engineers), then you have effectively told the existing cable ISP's that their monetary investment in their network access has been pretty much confiscated for non-governmental emminent domain. That will never stand up in court.

3) Last mile ownership
And finally we come to the biggest problem that ends up happening for a lot of the new "competition" that gets added into the market. They are leasing the lines they are reselling to the end customer. If there is any problem with those lines, they have to go back to the company that they are leasing them from in order to get any repairs or upgrades done to those lines, which then puts them at a service disadvantage, as the original owner of the lines will likely be much more readily able to service their own customers first before dealing with repairs of upgrades to lines that are not generating them the same revenue. I'm not saying this will be intentional, either. But by adding another layer of B2B communication necessary for any work to be done, with the end user unable to communicate directly with the people who would be doing the services, you end up with a process that will ultimately fail often enough that the "competition" will end up looking badly in the market due to inability to perform, even if the original owner of the lines was bad to begin with.

If everything were a blank slate and we were just proposing rolling out a whole new infrastructure and build out of what constitutes the Internet, this market driven plan would make a lot more sense, and could even be a boon for the internet as a whole. As it stands, we are about 30 years too late.
posted by daq at 5:27 PM on June 27 [9 favorites]


Those are all easily solvable by moving the pipe providers to proper asset based regulation.
posted by JPD at 5:30 PM on June 27 [2 favorites]


That will never stand up in court.

But hopefully vigorous enforcement of existing anti-trust statues will (cough comcast cough).

confiscated for non-governmental emminent domain

Well, the supreme court said you can seize land under imminent domain and then hand it over to a private party (or sell it to them) for the 'greater good' (or whatever that awful awful decision said).

I'd be happy with just using imminent domain laws to take the infrastructure (from comcast), no need to resell it to a private entity to make me happy.
posted by el io at 5:40 PM on June 27


Those are all easily solvable by moving the pipe providers to proper asset based regulation.

You going to foot that bill? That means buying out the existing infrastructure, stripping the existing franchise agreements from thousands of municipalities, restructuring the current data providers into a whole different line of business, and then trying to pay for it all on existing revenues. Not to mention the hardware, and the fixed cost of maintaining and servicing that hardware and infrastructure. Botton line, that would be MORE invasive to the operations of existing cable/data/ISP providers than any of the other things I've outlined above (unless I'm misunderstanding your terminology of "asset based regulation", which my limited knowledge is forcing the infrastructure into utility regulation, which, again, is way beyond just Net Neutrality.)

Or I could be reading that wrong.
posted by daq at 5:42 PM on June 27


Hundreds of Cities Are Wired With Fiber -- But Telecom Lobbying Keeps It Unused
posted by George_Spiggott at 5:50 PM on June 27 [3 favorites]


daq: we broke up AT&T. There were short term headaches, but I think everyone will admit the competition that took place after that was great for the marketplace (although not good for people that wanted the excuse of 'this costs a lot of money' to stop a tiresome long-distance call).
posted by el io at 5:58 PM on June 27 [1 favorite]


Oh, also, just talking about cable ISP's, but the hardware is not designed to allow the kinds of common carrier that a lot of people talk about with things like DSL and the shared lines over copper. With most cable infrastructure, they use frequency filtering to carry multiple signals over a single line. This is now you can have both television and internet coming into your house via a single coaxial cable. The problem is that at the CO, all of those lines converge and are muxed into a single fiber connection to the backbone. That hardware is not designed to segregate the traffic, and if they were forced to try and deliver only layer 2 traffic and bandwidth to multiple end points, the infrastructure costs would be through the roof.

But that's just if you really want to get into the nitty gritty of the backplane of the networks. (I know way too much about this, and have never worked directly for an ISP or teleco. Do not ask me why I read technical manuals when I'm bored. I'm bored a lot)

If we're talking about just dumping the existing infrastructure and doing a new distribution of subscribers model, that would mean that Comcast would no longer be allowed to sell directly to end subscribers (which I'm sure a lot of people would love). But creating a whole new market is something that the existing market will not support, as the risks and return on investment are categorically stacked against any new cable/internet provider, at least not with out possibly a decade to migrate all existing cable customers to new providers. Of course, the huge number of jobs that could create would be phenomenal, and a lot of those jobs would be high paying (relatively) technical jobs. But that is putting the cart way before the horse in this case.
posted by daq at 5:59 PM on June 27


There are multiple examples of regulating industries and legal precedents for doing so. As long as the allowed return is fair its legal in the US. Take a look at the history of utility regulation in the US. You don't need to buy the assets.

My real concern would be the viability of isps under real competition.
posted by JPD at 6:03 PM on June 27


Also take a look at the deregulation of electricity and gas in the UK.
posted by JPD at 6:04 PM on June 27


JPD,

Wait, now you are really confusing me. You are talking about regulating industries (in this case, ISP's) but then telling me to look at the deregulation of previously state-owned and operated utilities?

One of these is not like the other. It's not two sides of a coin we're talking about (regulation/deregulation).

Also, el io, the AT&T "breakup" was a fiasco and still is. It was not "successful", and in most of the U.S., the "baby bells" that the breakup created still maintain the majority of the marketshare. Then if you look at the financial stability of the "new competition" created by the deregulation, you have a whole lot of very precarious and unable to perform up to the same level of service, because they are reliant upon their competition to both lease the lines to them, AND compete with them in the same market. This means that any problems outside of their own NOC's requires them to contact the incumbent leasing company to do any service or repair (or install). Again, back to the last mile owner problem. If you forced the existing line owner to only resell their lines to other companies, that 'might' work out better, as then their only customer is the resellers, and they wouldn't be competing for the same subscriber base. But I do not think that would be the end result of any action, especially by the FCC.
posted by daq at 6:22 PM on June 27 [2 favorites]


Well. When they privatized and deregulated utilities in the UK they severed integrated utilities into wires, generation, and supply. They also determined what the regulated asset base would be for the wires.

That's essentially what would need to happen here. Sever the providers into pipe and connectivity and force free access to the pipes to third parties.
posted by JPD at 6:49 PM on June 27


Also you can't allow the pipe guys to also sell connectivity.

The problem with bell break up was always that it didn't go far enough.
posted by JPD at 6:52 PM on June 27 [4 favorites]


I think the state should take over the running of the physical plant as a utility (ie, the fiber lines and colos), eat the cost of running fiber out to the homes, and then lease space in the colos and the lines to ISPs. Fiber is basically fiber. There isn't much innovation that's going to be happening there in the near future, so I don't think that the state maintaining that part of it would hold back investment or technological innovation.

The ISPs can then invest in new routers and back end bandwidth only.
posted by empath at 6:57 PM on June 27 [4 favorites]


Also, as someone who used to work at a clec, dealing with verizon was rarely a problem. Their techs generally moved pretty quickly and got the job done. There was a bit of back and forth finger pointing every once in a while, but that happens even between different groups in the same company.
posted by empath at 6:59 PM on June 27


One last thing: for clecs, residential service is break-even at best. We made the vast majority of our profits selling to businesses. The same bandwidth sold to a business customers was up to 100 times more expensive. The difference is absurd. We would rather sell what was basically a support contract for thousands of dollars a month than cheap bandwidth to a home customer for $25.
posted by empath at 7:05 PM on June 27


I think the state should take over the running of the physical plant as a utility (ie, the fiber lines and colos), eat the cost of running fiber out to the homes, and then lease space in the colos and the lines to ISPs. Fiber is basically fiber. There isn't much innovation that's going to be happening there in the near future, so I don't think that the state maintaining that part of it would hold back investment or technological innovation.

I think if we're going to go this far, the city or county should just sell the service itself, like any other utility.

Not that you shouldn't be able to pay an ISP and do that if you want, but if they're going to own the network anyways there should be some base level, no frills affordable service. If you want 1000mbps, or IPTV, or VOIP, or any of the other fancy stuff you can go get comcast or whatever. But if you just want a basic, like 25mbps pipe you should just be able to buy it right from the utility. And to be clear, this doesn't even need to be a wired connection. Putting wireless APs on all the street lights counts too. A wired connection can be an incentive to buy ISP service, and a bone thrown to them.

Of course, municipal broadband seems to be seriously fucking dead at this point, but i still think it's something that needs to happen. The wireless thing has started to happen and failed several times in seattle now.
posted by emptythought at 9:18 PM on June 27 [3 favorites]


The US broadband situation is much like our healthcare: we pay the most of anyone in the world, get the least results, it sucks, and we think it's great.

That's not particularly true. There are a few bright spots in the world and the US isn't one of them, but for the most part broadband service sucks right around the globe.
posted by Tell Me No Lies at 10:34 PM on June 27


I think if we're going to go this far, the city or county should just sell the service itself, like any other utility.

If you did that, internet would forever and always be locked in wherever it is. Government just doesn't do innovation, really, when they run utilities. Maintaining the cables doesn't require any innovation, particularly, but developing new services and increasing speeds and so on does. A state takeover of the 'last mile' essentially consolidates the cost of running fiber to the houses and dramatically reduces the startup cost for competitors to come in. It doesn't actually cost very much to start an ISP if you're not running the fiber to the home. One cable to a big equinix data center, and a router in one colo, and you've got a hyper-local isp. Throw in a voip system, and you're providing phone service, too.

The problem isn't that Verizon, etc, are private entities, it's that they're private entities with essentially monopoly power. Taking the cables from them resolves that.
posted by empath at 10:47 PM on June 27


2) Shared carrier agreements
This solution is on it's face laughable, mostly because the lines and equipment that is already deployed was paid for already by the existing franchised monopolies. If you are saying that they should now allow some other company to piggyback on their network without paying through the nose for this, as well as paying a very large chunk of change to upgrade the capacity of the network (not to mention paying for a whole lot more network engineers), then you have effectively told the existing cable ISP's that their monetary investment in their network access has been pretty much confiscated for non-governmental emminent domain. That will never stand up in court.


Why not? It worked for Ma Bell with anti-trust law. And a whole lot of that infrastructure was paid for by various state entities and subsidies, as well as favourable access rights to state and federal land. And even if you end up exerting eminent domain, the Supreme Court seems fairly happy with that as long as it's not the state that ends up owning it.

Even if that was the case, you could do a lot with expanding the DSL infrastructure - which already passed court muster for DSL1 via shared exchanges. In the 00's in the UK, ADSL2 was mass deployed through the telecoms copper network in the UK, giving much better speeds for DSL connections. FTTC followed, and over 66% of the population now have access to VDSL connections to their cab; I have 76/20Mb over my copper telephone line, with a wide range of different providers using BT Openreach's infrastructure at fair rates - $40 a month, in my case.
It should pass 90% by the end of next year.

FTTP is in the experimental stage for Openreach at the moment, but is the natural extension of FTTC in the future.

For those very rural areas where FTTC is cost prohibitive, there's big growth in local wifi; directional antennas to a local mast, which is hooked up to BT Openreach's fibre backbone, at reasonable prices. 4G opens up some interesting possibilities for cheap broadband that way.

And the UK is the slow man of Europe. There's plenty of other countries around us where broadband is faster and cheaper. Yes, yes, america is much bigger than a european country. But if you compare individual states to european countries, and realise most of them have great broadband over a large geographical area, you can certainly provide fast, cheap broadband to the majority of the US population through competition via shared infrastructure alone.

Get started with upgrading the DSL network, slap the neutrality regulation handcuffs on the cable networks to prevent the worst abuses in the mean time, and see if you can expand to unbundling them and the fibre networks. Hell, just allow munipical areas to roll out their own networks* in competition instead of having them shut down by court action, and see how quickly the cable companies want to enter cable sharing agreements rather than have their entire lunch eaten by cheap physical competition.

* Do like the unbundled telecoms in europe; have the muni service run the infrastructure, and competing iSPs provide service over it. There's a number of successful models.
posted by ArkhanJG at 11:13 PM on June 27 [2 favorites]


One concern of this kind of regulation is that it can discourage investment in the phone network. After all, if every company gets access to the upgraded network, the incumbent operator cannot achieve any competitive advantage by making upgrades.

This doesn't seem to have been a big issue with the European style split between infrastructure and consumer providers, as in the case of BT Retail here in the UK, it genuinely seems to have no more sway over how (BT) Openreach develops its services than other providers. What did happen, and it seems that the regulators have cracked down on this recently, is that with charging £9.50ish a month for the cost of the copper, their last mile business wasn't keeping up with repairs fast enough. Which is why, when I moved into my current flat 18 months ago, it took 4 months to get a phone line installed*, 400 metres from the exchange, and they insisted (extremely unlikely, given the very patchy mobile reception in my flat) there had never been a phone line to the flat before.

So there was a cost in lack of maintenance investment, but not so much in lack of technology investment. And the reason that the price of the rental of the copper pair was so low was because of competition, obviously.

*it was just coming up on 4 months of waiting when Margaret Thatcher died. People did mention not having to wait 4 months for a phone line as one of the finest parts of her legacy. I laughed. Hollowly.
posted by ambrosen at 7:25 AM on June 29


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