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FCC Study: Open Access Lowers Prices, Improves Competition
Agency discovers real science, U.S. broadband mediocrity
by Karl Bode 01:01PM Friday Oct 16 2009
Gosh, 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.


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WernerSchutz

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Sugar Land, TX

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reply to BillRoland

Re: I can't help but be reminded...

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.


BillRoland
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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."
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