FCC Weighs Net Access Charge Decision 86
An anonymous reader writes "The FCC is considering a request from AT&T to lift restrictions on the types of charges they can level against competitors that use their infrastructure. The organization had previously allowed that for Verizon by virtue of a deadlock, and Ma Bell now hopes to see similar treatment. 'All the requests have been strongly opposed by smaller rivals such as Sprint Nextel, Time Warner Telecommunications and XO Communications. These competitors argue that they have few alternatives to get access to the high-speed lines they need, and are being charged more and more by the dominant carriers.'"
Re:Good (Score:3, Interesting)
I wonder though --
As I watch roads being widened, the utilities are relocated, new and often better quality lines are strung, storms take out huge swaths of utility lines that are replaced under disaster area declarations, new developments are built that require service where there was none, and such; I ask -- how much taxpayer funding provided these upgrades? Upgrades that a private company profits from. Upgrades or additional subscribers that they would not have taken care of otherwise.
Does anyone know the answer?
Re:Good (Score:3, Interesting)
Therein lies the rub. FTTP is simpleish compared to tearing up streets like Wilshire in downtown L.A. and laying down new fiber.
IMO, the best solution would be to strip AT&T of all services, leaving them with just the fiber, so they don't have conflict of interest carrying both the lines and the services on the lines. (Note: We could also strip the fiber from AT&T making a new company, the end result is one company manages the lines...like a utility.)
Re:Good (Score:5, Interesting)
Telecommunications requires so much capital investment that it tends towards a natural monopoly, at least within regions, dominated by whoever can get there first and run the wires around. Once that first person is there, much of the impetus to repeat the investment is gone.
Due more to some interesting historical/technological developments than any real forethought, some people happen to actually have two sources of telecommunications, one run by the phone company any one run by the cable TV company. This sort of parallel infrastructure buildout is unlikely to happen again; in fact I think it may actually decrease: one company or the other will decide to expend its resources in areas where the other company isn't, meaning that if you want really good, high speed service, there will be a clear choice even if you have two wires running into your house.
And really, it doesn't benefit most consumers to have two halfassed networks coming into their house. You're probably only going to be able to easily use one of them (at least one of them, per service, but those services -- TV, phone, data -- are quickly becoming one "packet data" service anyway). Two companies forced to lay parallel infrastructure are always going to have higher costs and worse service than a single company, because of the extra overhead they carry, if (and this is a non-trivial 'if', granted) the single company is forced to offer service at cost, rather than being allowed to increase it.
Even in minimalist conceptions of government (which I am generally a fan of), there is a legitimate function for the state when it comes to the regulation of natural monopolies. Although I'm not advocating for state-run telcos -- although they may look good on paper, history has shown that state-run industries generally suck terribly -- the way things worked in the U.S. from deregulation to a few years ago (thanks, George!) was that the first carrier to build-out in an area, in return for using the public rights-of-way, had to share the infrastructure with other firms basically at cost, or at low negotiated rates (e.g., "Local Loop Unbundling"). Since this system has been undercut by the telco drones at the FCC, connectivity costs have gone up far in excess of service offered, and competition has diminished.
Don't regulate special access (Score:1, Interesting)
This op-ed in the Washington Times today does a great job explaining why regulating special access would be a bad idea. http://washingtontimes.com/article/20071011/COMMENTARY/110110009/1012 [washingtontimes.com]
The Progress & Freedom Foundation [pff.org] recently published an empirical examination finding a positive correlation between flexible pricing and incumbent investment. The report reaffirms what economics tells us: lower profit potential in a market segment means less investment. Somebody has to be willing to throw down some serious cash to increase the bandwidth of central office. But incumbents tend to divert resources to more lucrative ventures if CLECs can reap the benefits without taking any of the risk. Sure, CLECs have to pay wholesale prices plus rate of return, but there's no risk in that proposition-except for the incumbent. Phone companies allocate the most resources to areas where the FCC does not regulate prices.
There is real competition in the market for high-speed internet access. Business cable, DSL, satellite internet, 3G, fixed wireless, and now 4G/Wi-Max all compete with T1 lines for workplace connectivity. These aren't perfect substitutes yet, but they keep getting better as DOCSIS 3.0 starts to be implemented and wireless broadband gets faster and cheaper. The upcoming 700mhz auction will mean even more growth in this area.
The FCC is making the same mistake the FTC made with the XM-Sirius merger, or the Staples-Office Depot merger. Just because the market for a specific product may have 1 supplier doesn't mean its a monopoly-as long as substitutes exist, there will be price competition.
Phone service isn't a natural monopoly anymore. The duplicative cost of having multiple carriers is tiny nowadays compared to the massive welfare gains from competition. And if phone service really is a natural monopoly, why does the FCC need to insulate telcos from competition? Shouldn't the market gravitate towards 1 supplier without government intervention? In 1934, under political pressure from AT&T, the FCC began its disastrous policy of enforcing monopolies on telephone service. Ma Bell successfully lobbied Congress to entrench its monopoly status [mises.org] because upstarts were doing such a good job competing, so profit margins weren't as large as AT&T had become used to. Imagine a world where people had real choice for TV, phone, and internet. Franchising and universal service would have to be eliminated; but in this day and age if people want to live in rural areas, why should the rest of us have to suffer?
Wholesale vs retail (Score:4, Interesting)
It has been somewhat successful in that goal, but it isn't any sort of solution. What it has forced has been the continual degradation of customer service from the ILECs because the only way they can compete price-wise is by cutting non-essentials. Customer service was the first to go. Installation and physical plant maintenance was next.
It as if you had a car dealer that was required to sell cars in bulk at a substantial discount to other car dealers who could then turn around and sell these cars to the public for less than the original dealer could afford to. The original dealer would be forced to cut prices to match and cut services to continue to be able to afford to keep up. Mandating the bulk sales to introduce this artifical competition is absurd and just creates a race to the bottom where everyone is competing on price and everything else is sacrificed. This is exactly where we are today.
Yes, I have the option of choosing telephone service from a variety of different retailers. All of these retailers are using the same infrastructure owned by the ILEC, in my case Qwest. Qwest has awful customer service and is doing a lousy job of maintaining their physical plant. But the structure of this deal ensures that no competing physical plant will ever be built. Why would it when you can lease access at a discounted rate that is far, far less than what it would cost to build it? Or, as Qwest is discovering, even maintain it?
I used to be under Ameritech/SBC. Same problems. I could get a T1+phone+data from a "competitor" for for less than I could get the same number of phone lines from SBC. Why? Because SBC was required to lease out the infrastructure at below-cost levels.
Where does this artifical nonsense of "competition" end up? Well, nobody is building, improving or replacing physical plant except in unusual circumstances. Verizon has apparently discovered that if you run fiber all the way that you no longer have to lease out the infrastructure. That apparent loophole is all the reason needed to replace the copper with fiber. I do not believe there are solid figures for maintenance cost but I would suspect that buried fiber is substantially more expensive to maintain than buried copper in the long run. So if Verizon has to lease out the fiber at less-than-cost levels as they have to do with the copper you can expect fiber to go unmaintained and to stop running fiber. I can't imagine the loophole lasting very long and I would not want to be orphaned with fiber that nobody wants to maintain.
There is the usual sorts of comments about how the infrastructure should be publiclly owned. Sure, look at some other countries where this has been the case. The difference is that the original infrastructure was built by the government, not nationalized by the government. The US has never nationalized anything that I know of and it is highly doubtful they would start with the telephone network. I don't see that happening. Nor do I believe it would be in anyone's best interest.
So where could competition come from? It is difficult to say. The current artificial competition is very destructive and has created no real competitors but a bunch of leeches. Just as with a leech, if the host (the ILEC) the parasite dies. The real solution to this would be to have competing infrastructure - the ILEC has the copper and someone new runs fiber. Unfortunately, anyone owning physical plant today has to be prepared to support the army of leeches that would come forth. So why would anyone build physical plant today if they have to share it and probably share it below cost?
This isn't competition. It is a suicide pact. If an ILEC folds, everyone loses and we all get to discover there isn't any "competition" at all.
Re:Poltical grabass (Score:3, Interesting)
And the simple answer is socialize bulk data transfer. Build a government telco-hut in every city in America with 30,000 or more people. Run huge-ass fiber pipes everywhere, in star topology radiating from all the major cities, bigger pipes in larger cities. Put hubs in NYC, Boston, Washington DC, Atlanta, Tampa, Dallas, Memphis, Chicago, Denver, Vegas, LA, and San Jose, with leafs out from there. Peer with MAE-East and MAE-West. Make it government-owned, and charge everyone the same rate, regardless of the size of their company. Also have everyone sign an agreement saying that by buying access to this superexpresshighway, you agree to route traffic according to BGP rules for anyone on your end of the network.
Problem solved, and we can finally get that 100Mbps internet for $10/month like the Swedes have had for several years now.
~Wx
How is this allowed? (Score:3, Interesting)