FCC Study: Open Access Lowers Prices, Improves CompetitionAgency discovers real science, U.S. broadband mediocrity 01:01PM Friday Oct 16 2009 by Karl Bodetags: legal · competition · fcc · business · bandwidth · Op/Ed · legislation · consumersGosh, it seems like only yesterday the FCC was telling us that broadband competition in the United States was incredibly robust based on completely inaccurate data. But not only has the FCC seen a change in leadership, they've made a promise to actually base policy decisions on science, not just AT&T or Comcast lobbyist flow charts. As such, a new report by the "more sciency!" FCC confirms what most studies have found: that the United States is "a middle-of-the-pack performer" when it comes to broadband speed, penetration and price. Contrasting with a decade of FCC "hands off" policy that ignored precisely these kinds of studies, the new study (pdf) suggests that open access policies have helped other leading industrialized nations develop more competitive broadband markets by lowering entry barriers. The 232 page study, crafted by the Harvard University's Berkman Center, argues that in countries where "an engaged regulator" enforced open access obligations, robust competition was usually the result. The lowest prices and highest speeds are almost always offered by firms in markets where, in addition to an incumbent telephone company and a cable company, there are also competitors who entered the market, and built their presence, through use of open access facilities. -FCC study |
It's not particularly surprising that a study commissioned by a regulator shows that regulator involvement in broadband policy makes sense. Still, the study makes some salient points as it tries to deconstruct the long-standing industry meme that all regulation is inherently bad, and that companies left alone to their own devices will magically lead the telecom sector to a fruitful, organically competitive consumer utopia. "Contrary to perceptions in the United States, there is extensive evidence to support the position, adopted almost universally by other advanced economies, that open access policies, where undertaken with serious regulatory engagement, contributed to broadband penetration, capacity, and affordability in the first generation of broadband," says the study. That's not deja vu. It's a return to the central idea of the 1996 telecom act, which required incumbent operators to share network access with smaller competitors in order to bolster competition as those upstarts grew into legitimate carriers. A combination of inconsistent regulation and carrier lobbying ultimately resulted in the U.S. scrapping the idea, though interestingly, countries like France took our discarded idea and made it work. In Paris, those small fry upstarts evolved into competitive fiber ISPs, and consumers now benefit from some amazing prices by our American standards (like 100Mbps Cable, VoIP & 120 TV Channels for $38). "The lowest prices and highest speeds are almost always offered by firms in markets where, in addition to an incumbent telephone company and a cable company, there are also competitors who entered the market, and built their presence, through use of open access facilities," the study concludes. While American ISPs eagerly dispute this, there is endless data supporting the argument that the policies we employed for the last decade have resulted in neither robust competition nor the kind of lower prices seen in countries with open access policies. The problem in the States hasn't traditionally been the idea of open access, it has been the way the idea is implemented. Efforts to craft regulation codifying such practices have generally been polluted by lobbyists, who then use said failure to proclaim open access provisions are inherently flawed. It's somewhat of an endless cycle that has resulted in our replacement broadband policy, which essentially consisted of government doing whatever the wealthiest and largest carriers told it to. Not surprisingly, this helped kill off most independent ISP competitors. The FCC's study of course will fuel their new national broadband plan, which is to be presented before Congress in 124 days. Not coincidentally, the man behind the FCC's broadband plan is Blair Levin, who was FCC boss Reed Hundt's chief of staff during the agency's 1996 attempt at line sharing and local loop unbundling. All of this has to be fairly unsettling to the biggest ISPs, who spent years and millions of dollars lobbying to derail the last major open access push, and now face the daunting possibility of having to do it all over again. Related:- Thursday Morning Links
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 |  |   thanksfoxnws
@comcast.net 1 edit | Re: So basically.... Also, dont forget; municipal fiber services may be cheaper; but the govertment can make up the money in an area where private business cant: taxes. | |
|  |  |  Necronomikro
join:2005-09-01
| Re: So basically.... said by thanksfoxnws :Also, dont forget; municipal fiber services may be cheaper; but the govertment can make up the money in an area where private business cant: taxes. Some of these projects just use bonds, and have to sustain themselves. | |
|  |   n2jtx
join:2001-01-13 Glen Head, NY
·Optimum Online
| said by baineschile :Dont get me wrong, I am all for good competiton and speeds; but I dont think private ISPs should have to incur the cost of wiring unprofitable areas. Perhaps that is an area where the government should build the fiber optic infrastructure and then charge a small toll for anyone who wishes to use it in order to support it without taxpayer funds (ISP's and end-users). Just like portions of our highway system that are funded by tolls. Otherwise we would probably have highways only in the major metropolitan areas and nothing in the rural areas connecting them together. We already have the USF yet the big telco's and cable companies seem to be able to collect that money and not completely deliver to those areas. -- I support the right to keep and arm bears. | |
|  |  |   BillRoland Premium join:2001-01-21 Ocala, FL clubs:
·Cox HSI
| Re: So basically.... said by n2jtx :said by baineschile :Dont get me wrong, I am all for good competiton and speeds; but I dont think private ISPs should have to incur the cost of wiring unprofitable areas. Perhaps that is an area where the government should build the fiber optic infrastructure and then charge a small toll for anyone who wishes to use it in order to support it without taxpayer funds (ISP's and end-users). Just like portions of our highway system that are funded by tolls. Otherwise we would probably have highways only in the major metropolitan areas and nothing in the rural areas connecting them together. We already have the USF yet the big telco's and cable companies seem to be able to collect that money and not completely deliver to those areas. Except the toll roads are almost always found in metro areas rather than rural ones. -- "Don't steal. The government hates competition." Beyond AM. Beyond FM. XM | |
|  |  |  jjeffeory
join:2002-12-04 USA
| Toll roads are most predominant in the East and near large cities in the Northern Midwest states ( I-80/90). I hate them with a passion. Driving from Washington, D.C. to Maine, for instance costs about $50 in tolls. It's terrible. I can drive from Washington, D.C. to Los Angeles without paying 1 toll, but go through MD, NY, NJ, Mass, Maine, etc, and I'm tolled to death. I can drive from San Diego to L.A., San Fran, Sacramento, Portland, and Seattle without a single toll.
Nah, I don't like that idea. Just put it in the base price.... No internet toll for me, please... | |
|  |  |  |   Richard B Fur It Up
join:2007-06-22 Portland, OR | Re: So basically.... But at lest the people who are using the roads are paying, not me in Oregon. | |
|  |  |  |  |   baineschile 2600 Premium join:2008-05-10 Sterling Heights, MI
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1 edit | Re: So basically.... said by Eat Me :
The same was said many years ago of electricity, telephone and mail delivery. And to this day, its more expensive for the electric company, telephone, and mail delivery are more costly in rural areas than densely populated ones. | |
|  |  |  |   Eat Me
join:2002-09-25 Sussex, NJ
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3 edits | Re: So basically.... said by baineschile :said by Eat MeThe same was said many years ago of electricity, telephone and mail delivery. And to this day, its more expensive for the electric company, telephone, and mail delivery are more costly in rural areas than densely populated ones. Not true. Our electric and cable TV rates up here are less than those in the more populated areas in NJ.
The electric company is a cooperative, and the cable TV company is a family owned company. Both of those don't have to worry about Wall Street, which is why the rates can be less.
When your utilities are owned by Wall Street or big Government, that is when areas suddenly become "unprofitable." | |
|  |  |  |  |   SLD Premium join:2002-04-17 | Re: So basically.... The publicly traded corporations of today are way to big for the infrastructure that supports them. That is why we see this imbalance. | |
|  |  |  |  |  |  |  |  qworster
join:2001-11-25 Los Angeles, CA
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1 edit | said by Eat Me :said by baineschile :Dont get me wrong, I am all for good competiton and speeds; but I dont think private ISPs should have to incur the cost of wiring unprofitable areas. The same was said many years ago of electricity, telephone and mail delivery. You also left out a third option - cooperatives. Problem is that the big telcos do everything in their power to stifle their competition, even in the "unprofitable" areas, so it becomes difficult for a small co-op or even muni broadband to become reality in many areas. Not to mention that the ILECS buy up all the spectrum that could be used for wireless in the rural areas-and then sit on it (warehouse it), so it can never be used. This is yet another way they stifle competition-the big bully comes to town and takes all the good stuff for himself-leaving all the scraps for everyone else. | |
|  |  |  |   vzw emp
@qwest.net
| said by baineschile :Also, dont forget; municipal fiber services may be cheaper; but the government can make up the money in an area where private business cant: taxes. So, if your cable bill goes down $50 by switching, but your taxes go up the same amount, is is really worth it? I understand that's a concern for some people, but where has that happened? Even in areas where the muni project went belly up I don't believe they raised tax rates to compensate. I think this is one of the examples cited by opponents of muni-broadband to drum up opposition to those projects.
I worked for AT&T in the late 1990's/early 2000's when line sharing was still in effect. AT&T knows line sharing works and even took advantage of the 1996 Telecom Act by offering local phone service (pre SBC merger and before long distance companies were allowed to re-enter the local phone market). AT&T offered local phone service in areas served by ILEC's across the country and were doing quite well. We had a backlog of new orders and LNP requests.
I think this fact taught AT&T (and others) 2 things. First, line sharing works. Second, if their customers had another option they would drop their current carrier, leaving AT&T and the other ILEC's (or ISP's for that matter) scrambling to win them back. | |
|  Gilitar
join:2000-11-20 Mobile, AL
·AT&T Southeast
2 edits | Conflicts of interest It seems to me that what we need is seperate content and service providers. This way all TV could be IP based and multiple TV providers could compete through the same pipe. This would really open things up. BTW, Comcast owning NBC shouldn't be allowed to happen. That would be an even bigger conflict IMO. | |
|  |  |   BillRoland Premium join:2001-01-21 Ocala, FL clubs:
·Cox HSI
| I can't help but be reminded... every month, that my electric bill, which is from the city owned utility, is the most expensive in the entire State of Florida. Government entities can subsidize broadband for as long as it takes to run private enterprise out of town because they can recover it with taxes. Once they are the monopoly, look out. -- "Don't steal. The government hates competition." Beyond AM. Beyond FM. XM | |
|  |  |  |  |  elray
join:2000-12-16 Santa Monica, CA
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| Re: I can't help but be reminded... said by baineschile :said by BillRoland :every month, that my electric bill, which is from the city owned utility, is the most expensive in the entire State of Florida. Government entities can subsidize broadband for as long as it takes to run private enterprise out of town because they can recover it with taxes. Once they are the monopoly, look out. Kudos Our city-owned electric monopoly not only charges 1/3rd more than the national average, the billions we pay to the utility to maintain infrastructure get passed to the city coffers instead. (In addition to the 12% tax.)
Recently, they tried to establish a solar rooftop monopoly, so that ONLY the utility's union members could install the panels. Only through a broad coalition of interests did we defeat the "emergency" measure that would have allowed this and committed us to untold billions in rate increases and taxes.
The CEO just quit because he and the mayor were caught violating the water conservation law (after hiring ten "water cops" to enforce it!), while the aforementioned infrastructure has been creating sinkholes 10x a day all about the city. Oh, and of course, there were the lactation classes.
Private firms always have the potential to be evil, but they have an incentive to be efficient, and you can always buy their stock - if you believe them truly so evil, they'll be paying you dividends. | |
|  |  |  |  |  |  |  |  dishrich
join:2006-05-12 Springfield, IL
| Re: I can't help but be reminded... And our city owned/run electric & water (CWLP) is around the cheapest in the state, if NOT the nation. They were going to get into muni cable, but it never materialized (unfortunately)...  | |
|  |  |   SLD Premium join:2002-04-17 | Meanwhile, our electric rates are some of the highest, because Texas decided to go free-market. Yay! We had costs of 26cents / Kw last year. | |
|  |  |  |  Asmodeus
join:2004-05-26 Spring Valley, CA
| Re: I can't help but be reminded... said by SLD :Meanwhile, our electric rates are some of the highest, because Texas decided to go free-market. Yay! We had costs of 26cents / Kw last year. You need to dig a little deeper to see why that actually happened. You may realize that the finger of blame is pointed elsewhere. | |
|  |  |  |  |   SLD Premium join:2002-04-17 | Re: I can't help but be reminded... Actually, it is fairly well documented, just like the California "energy crisis" that was manipulated by energy traders in collaboration with the energy provider.
It was a pretty big deal - Enron - remember? | |
|  |  |  |   zachary1 you talkin' to me?
join:2004-03-07 right here | Yikes! It's only 5.5 cents/kwh here. | |
|  |  |  |  cwh
join:2006-05-14 San Antonio, TX
| Look like electricty in houston is less than 1/2 of that now.
If your electricty was natural gas based, naturgal prices probably had more to do with that price spike than deregulation.
I paid only about 10kwh in Tx last year, but we use more coal than natural gas here. | |
|  |  |  |  |   SLD Premium join:2002-04-17 | Re: I can't help but be reminded... I'm able to get 12 cents per kilowat for renewable this year, but that is more than double what other parts of the country pay. | |
|  |  |  |  |  |  cwh
join:2006-05-14 San Antonio, TX
| Re: I can't help but be reminded... said by SLD :I'm able to get 12 cents per kilowat for renewable this year, but that is more than double what other parts of the country pay. I think that rate is about normal for most of the country, but yes there are places where it is less expensive. | |
|  |  |  |  jjeffeory
join:2002-12-04 USA
| Same thing happened in California when we became unregulated. Well, you saw that in the news a couple of years ago! Greed screwed us. We had electric bills that grew by 5x. It caused many people to leave, or charge those bills on their credit cards that they are now filing bankruptcy on... | |
|  |  |  |  |  |  WernerSchutz
join:2009-08-04 Sugar Land, TX
1 edit | said by BillRoland :every month, that my electric bill, which is from the city owned utility, is the most expensive in the entire State of Florida. Government entities can subsidize broadband for as long as it takes to run private enterprise out of town because they can recover it with taxes. Once they are the monopoly, look out. And private companies, once they become a monopoly, do exactly the same thing.
At least with governments you have a chance, as slim as it might be, to vote them out.
Try to vote out the Comcastic monopoly.
I view extreme positions of monopolistic power by either a communications company or the government backed initiative as bad for the customers in the long run. The balance between the two is the optimal point or balance between multiple companies clearly limited by anti trust laws. Currently with CC and telco's monopolies it is clear to me that only the government could step in to restore some of the balance. Of course, astro turfing telco/CC supporters will cry foul, but that is what government is supposed to do which is protect the citizen's interest, not the corporations'. A corporation legal status as a persona is an aberration created to get all the benefits and NONE of the obligations and it should be abolished. | |
|  |  |  |  |  |  |  |  |  |  |  |  WernerSchutz
join:2009-08-04 Sugar Land, TX
| Re: I can't help but be reminded... said by TKJunkMail :Especially if they can't sleep and want to be thrown in to a stupor. Versus when paying exorbitant bills generated by these monopolistic multinational companies when one becomes wide awake, too late, of course. Some truths are quite boring until they become an intractable problem. | |
|  |   KrK Heavy Artillery For The Little Guy Premium join:2000-01-17 Tulsa, OK | And you, as citizens and consumers are the ones who could fix that.
So why is yours the highest? | |
|  |  viperlmw Premium join:2005-01-25
·Qwest.net
| said by BillRoland :~snip~ Government entities can subsidize broadband for as long as it takes to run private enterprise out of town because they can recover it with taxes. Once they are the monopoly, look out. A flaw there is that government entities in situations like this cannot be predatory. I have difficulty believing that the taxpayers would be willing to subsidize this type of situation. To many 'no taxes' types out there (and here, too!). | |
|  rdmiller
join:2005-09-23 Richmond, VA | The Free Market will take care of it Karl,
Both Chairman Powell and Chairman Martin explained this very carefully. The Free Market will take care of everything. Just have faith! | |
|  |  PapaMidnight
join:2009-01-13 Baltimore, MD
| Re: The Free Market will take care of it said by rdmiller :Karl, Both Chairman Powell and Chairman Martin explained this very carefully. The Free Market will take care of everything. Just have faith! I pray that that was sarcasm... | |
|   SLD Premium join:2002-04-17
·Comcast
3 edits | It is finally coming to light... It is finally coming to light that Keynesian economics should not be dismissed. That free-market capitalists tend to be either wealthy or incredibly poor (naively convinced they too can fight to the top) bears this out.
The simplistic story of free market forces providing the best services as the lowest margins attracts uneducated dreamers like flies to shit.
The truth of this story is seen in the mono-duopoly experiences we have with broadband / TV service. Or worse, the wonderful lifestyle that Walmart has brought to us all. | |
|  |  viperlmw Premium join:2005-01-25
·Qwest.net
| Re: It is finally coming to light... said by SLD :It is finally coming to light that Keynesian economics should not be dismissed. That free-market capitalists tend to be either wealthy or incredibly poor (naively convinced they too can fight to the top) bears this out. The simplistic story of free market forces providing the best services as the lowest margins attracts uneducated dreamers like flies to shit. The truth of this story is seen in the mono-duopoly experiences we have with broadband / TV service. Or worse, the wonderful lifestyle that Walmart has brought to us all. QFT! | |
|  dynodb Premium,VIP join:2004-04-21 Minneapolis, MN
| Shocking FCC study concludes that greater FCC authority would be better. What a surprise. 
I fail to see how penetration would be increased by reducing potential revenue and increasing the return on investment for new deployments. It defies logic.
Want to increase penetration and lower costs? For a start, take on the extortionist tactics of municipalities that add time and expense to new deployments. See Verizon's prolonged efforts to get FOiS into NYC as an example. | |
|  |  |  |  Alareth
join:2006-12-27 Lamar, MS
| FCC study concludes that greater FCC authority would be better. What a surprise. The report was not created or authored by the FCC.
It was done by Harvard University's Berkman Center for Internet and Society. The funding for the study was also not from the government. It was paid for by the Ford and McArthur Foundations. | |
|  |  |   zachary1 you talkin' to me?
join:2004-03-07 right here | Re: Shocking The same people that sponsor many of PBS's Frontline episodes. | |
|  Pv8man
join:2008-07-24 Hammond, IN
| Hey everybody, what are your thoughts on this bill? (the snake, and bilderberger) Jay Rockefeller recently introduced S. 773, "The Cybersecurity Act of 2009."
Which would apparently give the gov control over BOTH gov and private networks, if they declare an "Cybersecurity emergency"
my question is, is that even possible?
I'm pretty sure people will find a way to by pass it right? | |
|  |  |   Simba7
join:2003-03-24 Billings, MT
2 edits | It's about freakin' time.. ..that the FCC finally looks at the data instead of relying on telecom lobbyists. I thought this day would never happen.
I really hope the FCC looks at the broadband bill with alot more scrutiny instead of letting the lobbyists snag all the money and do absolutely nothing to their existing network.
"Look, we bumped our speeds from 5 to 7mbps.. We had to upgrade our entire network and it cost us $500m".. When in actuality, "We pushed a firmware update that bumped the speeds from 5 to 7mbps and that's it. We kept the $500m and used it for new houses/cars/parties/etc for our VPs, etc".
EDIT: Oh, almost forgot (actuality).. "All of our customers will be paying the same for their services and we'll be putting up caps soon to punish you for using the bandwidth you paid for." -- Bresnan 15M/1M|MyWS[P4HT@4.01GHz,2GB RAM,2x1TB HDDs,Win7]|WifeWS[P4@2.4GHz,1GB RAM,60GB HDD,Win7]|Router[2xP3@1GHz,640MB RAM,18GB HDD,Allied Telesyn AT-2560FX,Kingston KNE100TX,2xDigital DE504,Compaq NC3131,iPro/1000DP,Blitz BWI715,Gentoo Linux] | |
|   dobad
@optonline.net | the fcc can do bad all by itself we've all been used to the past decade of gluttony on the part of corporate america that any little bone they throw at consumers seems to be a platnum paved brick road! | |
|  dagg
join:2001-03-25 Rio Linda, CA
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| here is a thought... im no fan of government spending but sometimes it does make sense. case in point: fiber infrastructure it makes little sense to NOT spend the time and money rolling fiber during road construction and bridge retrofitting. find a way to have some organization control the fiber and lease it at a break-even rate to anyone that wants it. result? fiber rollouts everywhere... tons of new jobs lots of growth and sudden drop in broadband pricing.
more government? sure, kinda... you would have to have real people to actually manage that kind of network but thats why it should run as a non profit... and the situation is not exactly previously untried (think USPS).
the possibility of seeing real broadband penetration to smaller communities suddenly becomes realistic when done this way.
of course since it all makes sense (even if you dont actually like the idea, it does make sense) it will never happen. | |
|  |  WhatNow Premium join:2009-05-06 Charlotte, NC | Re: here is a thought... Like your fiber idea. I would start in the rural areas that are on the electrical grid so when they run out of money those areas will have it. If they work from populated areas out then those at the end will never get fiber and fast speeds. | |
|  |  |  See 11 replies to this post | |
 |  qworster
join:2001-11-25 Los Angeles, CA
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4 edits | Here's the bottom line: We were sold down the river by the Bush FCC. They took ALL the competition out of Internet. You TRUE conservatives should be LIVID at them! Why? Because IF you truly believe in the free market, then what the Bush FCC did (essentially ELIMINATE the free market in Internet) should REALLY piss you off!
I live right in the heart of Los Angeles. I have TWO basic ways to get Internet: cable or DSL. CABLE gives me TWO choices: Time Warner or Earthlink. Basically, if I want cable Internet, I have to choose between service that either sucks or REALLY SUCKS!
Great choice!
With DSL I have a few more choices-IF I sign up for AT&T home phone service. If I don't, then I have but ONE CHOICE-AT&T dynamic dry line Internet.
So no matter what I do, I have to pay AT&T something if I want DSL!
Remember, with open access the companies who built the infrastructure do get paid-they simply have to let competitors LEASE part of that infrastructure (the 'last mile') from them for WHOLESALE PRICES. They still get their flesh-just a half pound instead of a pound!
Not only that-but the telcos AGREED TO DO SO-then with the help of the Bush FCC were allowed to renege on their part of the agreement.
If the FCC had truly allowed/required open access, I imagine that I'd have 20 or more choices for Internet, most NOT requiring me to pay AT&T anything. I'd also wager that I'd be paying less then I do (38 dollars a month for lineshare 6000/768 DSL, plus another 10 dollars a month to AT&T for measured phone service that I hardly ever use) AND getting higher speeds!
The way things are, I have two cable choices and ONE DSL choice that doesn't involve me having to buy phone service.
In the second largest city in America no less!
That's pathetic! | |
|  |  aparis99
join:2006-10-24 Owensboro, KY
1 edit | Re: Here's the bottom line: how many companies are going to spend MILLIONS to build a 3rd, or 4th cable system? It just doesnt give you much ROI with so much $ put into it and a small penetration rate...
you also have satellite internet as a choice (several to choose from) and also using the cellular network | |
|  |  |  qworster
join:2001-11-25 Los Angeles, CA
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3 edits | Re: Here's the bottom line: said by aparis99 :how many companies are going to spend MILLIONS to build a 3rd, or 4th cable system? It just doesnt give you much ROI with so much $ put into it and a small penetration rate... you also have satellite internet as a choice (several to choose from) and also using the cellular network Did you NOT READ my post at all? I said that as a result of The Telecommunications Act of 1996, the regulations were IN PLACE REQUIRING the Telcos to open their networks to others AT WHOLESALE RATES!!!!!!!!
Bush gutted them!!!!!
The wires are just sitting there unused anyway-so why not allow others to use them too-and make a few bucks while you're at it?
Satellite and cellular? Are you serious? Crap speeds and draconian caps-for hugely high prices-yeah THAT sure is serious competition! | |
|  |  aparis99
join:2006-10-24 Owensboro, KY | the point is you DO have options | |
|   TXTigerman Monopolies Kill
join:2000-12-21 Beeville, TX | An FCC that gets it! Jesus Christ! I thought I'd never see it. What a difference a few years makes. -- "Soon, we'll be right back to just AT&T." TXTigerman 2001 | |
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