Digital Extortion in the Dust BowlSBC's quest to lift regulation in the Sunflower State ( old news - 12:43PM Thursday Jan 23 2003) tags: competition · telco · legislation SBC's campaign to eliminate broadband regulation in the midwest has been in full gear for years, with the company threatening to halt rural broadband development in areas that don't politically concede to the idea that regulation is unfair to the baby bell. Their lobbying efforts are paying off, as a hotly debated Kansas bill could make it the third state to completely eliminate broadband regulation on the federal level with more on the way. Randy Tomlin's been a busy boy. The SBC Southwestern Bell (now simply known as SBC) Kansas president has been touring the state for more than a year, driving thousands of miles with his laptop, trying to convince regional lawmakers with a handshake and a Powerpoint presentation that it's in their best interest to support the elimination of broadband regulation in their areas. Tomlin argues that state regulation of SBC's broadband network is unfair, though the underbelly of his message is considered by critics to be a form of digital extortion: either support the elimination of regulation, or we won't be delivering broadband to your rural communities. " We are in a competitive industry today," says Tomlin. " The telecommunications industry overall is really challenged. We've got shareholders. We've got fiduciary responsibilities to those shareholders to spend wisely, and we're going to spend it where there's a wise investment. Where there's uncertainty, it's not prudent for our shareholders to spend that money." The tactic isn't uncommon, it's occurring in most rural communities nationwide. Eager to get broadband installed and be ready for the perceived approaching techno-broadband revolution, communities are accepting Tomlin's logic, unconcerned by critics who argue that such moves are the death of local broadband competition for decades to come. To these communities, one choice of broadband is better than none paired with the promise of a better tomorrow. The incumbent supporters argue that for all the saber rattling (justified or otherwise) of the CLEC supporting community, the CLEC's, if faced with rolling out the physical network, would likewise be unlikely to deliver the technology to such rural locations without incentive. The tactic of freezing broadband rollouts to rural areas as a political weapon is getting popular. BellSouth recently warned that they'd halt construction of their rural Lousiana DSL network, unless lawmakers reversed a recent decision punishing the company for threatening to disconnect DSL services to BellSouth customers who had switched their voice service to a competitor. The ongoing debate leaves 63 small communities waiting for someone, anyone, to provide them with DSL service. In Kansas, it's naturally the competitors that are the most concerned. " What they're saying this time is, 'You have to give my monopoly back before we'll invest in the infrastructure,'" said Rose Mulvany Henry, a director at Birch Telecom, a Kansas City-based competitor, in a recent interview with the Kansas City Star. Some communities like St. Francis, Kansas, refuse to wait while the legislative chess game unfolds, and have decided to roll out broadband as an area utility, despite the town's small 1,500 population. The only game in town, community members are offered 768K downloads and 256K uploads for $49.95 monthly, with cheaper packages available. But the idea of municipal broadband for most of these communities simply isn't cost effective or practical. Instead, the promises made by lobbyists like Tomlin for increased economic stimulus and job growth offer the most attractive option, and the path of least resistance. Tomlin's long, dusty lobbying trek grew closer to its zenith this week, as he testified before the state's House Utilities Committee on Wednesday in support of a bill that would prohibit state regulation of high-speed Internet service. " This bill will spur investment, helping the economy, and it won't cost the state of Kansas a dime," Tomlin said. " It is not deregulation. It is a removal of an opportunity to regulate." If the bill passes, Kansas would be the third state to have eliminated broadband regulation on the state level. Arkansas passed legislation in 1997, and several other states, including Missouri, have legislation pending. Much to the dismay of lobbyists for competitors like AT&T, a similar bill recently passed by a vote of 90-2 in the Oklahoma House of Representatives. The day after the legislation passed, SBC announced a new initiative to spend $30 million to develop high-speed Internet capacity in rural Oklahoma, and intends to continue their legislative push. " We're sitting here with a blank check in our hand, ready to sign it for whichever state gives us regulatory certainty," recently noted one SBC spokesperson.
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koitsu
Premium
join:2002-07-16
Mountain View, CA | Surely you jest. *sigh* PG&E all over again... | |
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BBC4544
join:2002-03-12
Saint Peters, MO | broadband for everyone this is great, gov't is starting to realize that if they step aside there will be progress. how many things have been held due to gov't involement? | |
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garagerock
Premium
join:2002-06-14
Louisville, KY
| Re: broadband for everyone said by BBC4544  :
this is great, gov't is starting to realize that if they step aside there will be progress. how many things have been held due to gov't involement?
Yeah, like 40 hour work weeks, child labor laws, OSHA regs...all terrible, bad things.
Free market isn't always the answer. | |
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BBC4544
join:2002-03-12
Saint Peters, MO | Re: broadband for everyone what are you talking about???????? | |
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garagerock
Premium
join:2002-06-14
Louisville, KY
| Re: broadband for everyone Your quote says:
quote:
this is great, gov't is starting to realize that if they step aside there will be progress. how many things have been held due to gov't involement?
You didn't specify broadband regs...sorry, my bad.
But I don't agree that deregulation is the answer. | |
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BBC4544
join:2002-03-12
Saint Peters, MO
| Re: broadband for everyone it seems the technology is out there but will not be rolled out due to an unprofitable market. i do not need hear about how much sbc made last. it is simple. if it was profitable then clecs would be depolying and so would sbc. we may disagree on deregulation but you would have to admit that change is need to make it desirable to do busy in rural areas. | |
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KoolMoe
Aw Man
Premium
join:2001-02-14
Annapolis, MD
clubs:
 ·Verizon FIOS
 ·Speakeasy
| Re: broadband for everyone The problem is, I think, the definition of an 'unprofitable market'.
If, as the ILECs claim, regulation is forcing them to sell access to their lines to CLECs at below the TRUE costs for maintaining those lines, then I agree - that could be unprofitable.
However, as I understand the current regulation, the costs the ILECs must use to rent to the CLECs is one dollar above maintenance costs.
This results in profit - but of course, not as much profit as SBC would like.
SO the REAL issue: is SBC being misleading when it says they have no incentive to build-out when it's not profitable? Are they really saying, the build-out will not be done because it would take us two years longer to recoup the build-out expenses than we'd like?
If that's the case, then my feeling is SBC needs to suck it up and deal - they've had a regional monopoly for long enough...AND they LOBBIED for the TA96 act to get into the (dubiously) lucrative long-distance market. So now, lie in the bed you made.
Perhaps instead of fighting so hard, they could be cooperative? How about working out a deal with the competitors to share the build-out costs? At least try?
Or perhaps someone in the state who cares needs to take the initiative and point out the federal programs setup to help such rural services (as noted here on DSLR over the past couple week headlines) so SBC can be bypassed entirely.
Ultimately the problem comes down to those in the legislature, in any state, being clueless as the real issues and options.
KM | |
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BBC4544
join:2002-03-12
Saint Peters, MO
| Re: broadband for everyone hey idiot
why does a clec not build out?????? what is stopping them????? if there was money to be made they would build out. what i am hearing from you is "bell has money,make them do it" how stupid is that, how about this, lets make clecs build out and force them to sell access to sbc. with your $1 theory is incorrect and even if it was correct it is still a stupid communist view. does the gov't make car manufactures sell thier cars for a $1 more then what it takes to build. so what if it takes 30 years to recoop r & d cost. wake up stalin | |
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footballdude
Premium
join:2002-08-13
Imperial, MO
| Re: broadband for everyone said by KoolMoe :
Finally, there is very little 'communist' about my viewpoint...socialist perhaps.
The only difference between communists and socialists is that communists kill people when they try to leave. | |
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LegoPower77
Abecedarian
Premium
join:2002-08-03
Arlington, VA
| said by KoolMoe :
Finally, there is very little 'communist' about my viewpoint...socialist perhaps. KM
"We can’t expect the American People to jump from Capitalism to Communism, but we can assist their elected leaders in giving them small doses of Socialism, until they awaken one day to find that they have Communism." — Nikita Krushchev
--
"Socialism in general has a record of failure so blatant that only an intellectual could ignore or evade it."—Thomas Sowell
[text was edited by author 2003-02-03 17:19:51] | |
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garagerock
Premium
join:2002-06-14
Louisville, KY
| said by BBC4544 :
hey idiot
why does a clec not build out?????? what is stopping them????? if there was money to be made they would build out. what i am hearing from you is "bell has money,make them do it" how stupid is that, how about this, lets make clecs build out and force them to sell access to sbc. with your $1 theory is incorrect and even if it was correct it is still a stupid communist view. does the gov't make car manufactures sell thier cars for a $1 more then what it takes to build. so what if it takes 30 years to recoop r & d cost. wake up stalin
Hmmmmmmmm....right of way? | |
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BBC4544
join:2002-03-12
Saint Peters, MO
| Re: broadband for everyone what right of way??? there are cages in co and per regulation a clec can build an rt and tie into plant. the reason why the do not is because they can lease the line without investing a dime in build out. the clec idea is good if looked at in a reasonable manner. if the clec does not invest into its own network then they should not reap the benifits of someone who does. | |
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alex4life
Alex4life
Premium
join:2001-06-22
Delta, BC
| Re: broadband for everyone said by BBC4544 :
what right of way??? there are cages in co and per regulation a clec can build an rt and tie into plant. the reason why the do not is because they can lease the line without investing a dime in build out. the clec idea is good if looked at in a reasonable manner. if the clec does not invest into its own network then they should not reap the benifits of someone who does.
Fine, but would you like to live in a world without competition? Competition is what keeps prices low.
--
I wanna Rock and Roll sometimes, and party once in a while. | |
| | | | | | | | | | moonpuppy
join:2000-08-21
Glen Burnie, MD
·Verizon Online DSL
| said by BBC4544 :
what right of way??? there are cages in co and per regulation a clec can build an rt and tie into plant. the reason why the do not is because they can lease the line without investing a dime in build out. the clec idea is good if looked at in a reasonable manner. if the clec does not invest into its own network then they should not reap the benifits of someone who does.
You seem to forget that those same plants owned by SBC were paid for by a goverment authorized monopoly. People got phone service from the phone company. They couldn't get it anywhere else. There was no choice until very recently. SBC didn't pay for their plants. Customers did. | |
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boogie74
join:2001-06-19
Neenah, WI
clubs:
| Re: broadband for everyone said by moonpuppy :
said by BBC4544 :
what right of way??? there are cages in co and per regulation a clec can build an rt and tie into plant. the reason why the do not is because they can lease the line without investing a dime in build out. the clec idea is good if looked at in a reasonable manner. if the clec does not invest into its own network then they should not reap the benifits of someone who does.
You seem to forget that those same plants owned by SBC were paid for by a goverment authorized monopoly. People got phone service from the phone company. They couldn't get it anywhere else. There was no choice until very recently. SBC didn't pay for their plants. Customers did.
First of all, in ALL businesses (monopoly or not), the "customers" pay to build the business entirely. That's how business works- you sell a product for more than it costs you to produce or provide, and the difference goes into your pocket and into paying for the business investment.
Secondly, having a past as part of a monopoly has nothing to do with requiring the company to invest in future items and share them with competitors. Exactly why is it that SBC should invest money in new products and technology and CLECs should not? Are you saying, "Lets tie the bad giant's hands behind his back to handicap him so others can be just as big one day?" That's not competition. It's not like a bowling game where one wins and the other loses, hence requiring a handicap to be added to the less successful player's score- both can win at this game.
Are you actually suggesting that since all oil companies used to be part of Standard Oil, I should expect FKG or Amoco to buy me a gas station and deliver their gas to me at below cost? Or perhaps I should be able to set up a cashier stand at my nearest Qwik Trip and let customers decide when they pump if they want my gas or Qwik Trips?
After all, Standard Oil WAS paid for by consumers- as there was no choice until THAT monopoly was broken up, and it should be seen as inefficient for me to have to put in my own gas station and negotiate my own oil rates.
Boogie | |
| | | | | | | | | | moonpuppy
join:2000-08-21
Glen Burnie, MD
·Verizon Online DSL
| Re: broadband for everyone Telephone companies had a gauranteed customer base. You either had them or no phone. What about long distance? Should we have never broken up AT&T?
Under your argument, long distance companies can be kicked off the local phone system because the local phone company wants to sell their own long distance. Imagine SBC saying either use our long distance or go get service from MCI.
At what point do we have a ton of wires outside and tie into the ones we want? Yes, this would be nice until we have a ton of wires to look at everytime we go outside.
SBC invested in items it can price without consent of the Public Service Commission. Caller ID, call waiting, etc. DSL also fits this catagory. These items are NOT regulated. Standard dial tone service is regulated so that SBC only makes a certain amount of profit. In exchange, they get a complete monopoly for local phone service.
Now, I have always said, I would like to choose my own ISP. I have cable and I am forced to use Comcast. I would like another ISP that will allow me more access to newsgroups, better website usage, etc. However, this is not the case in 99% of the time.
If local phone companies did it right, then there would be no need for competition since no one would challenge it. However, customer service is not important anymore. Who cares about the customers. Take it or leave it is the prevailing attitude. That's why other ISP's are wanted. | |
| | | | | | | | TheGhost
Premium
join:2003-01-03
Lake Forest, IL
clubs:
·AT&T U-Verse
 ·Comcast
| Are the CLECs allowed to build out in the same, unrestricted manner that an ILEC would. Meaning, do they have the same "Rights of Way" and the like? Also, if the CLECs were to "build out" as some describe, I would imagine they would still have to deal with the ILECs to get the last wires to the house, destroying everyones yards in the process.
Those who suggest that the CLECs just build out their own infrastructure are not being practical. The ILECs, through their MONOPOLY status were given certain privaleges to build out the network. They were allowed to make a profit on building out this network (cost plus), and they were then allowed to keep the network to themselves after deregulation.
When the ILECs are talking about building out, they are only talking FIBRE to the subdivision. They would then hook into their own copper to get the last distance to the homes. I am sure that if a CLEC would do that, the ILECs would be more than willing to let them hook up at that point also. .
Let's imagine that it did happen, the ILECs would then have to go out to remote places to hook up the last wire to the homes to the CLECs equipment (instead of just doing everyone from one central office). I can see the complaint now - "it takes us so long to hook up the CLECs because we have to go out in the field and it costs us so much in manpower to do it".
More and more I wish the states would play the emminent domain card and just take back the wires from these extortionist ILECs. Make them compete on a level playing field. | |
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bigunk
Gort, Klattu Birada Nikto
join:2001-02-10
Santa Clarita, CA
·AT&T Yahoo
| Re: broadband for everyone Bad idea. We have that here in CA. PacBell for the lines and last mile. ASI for DSL services. PBI for ISP services. You can't pick and choose who you use. All three are under the same corporate umbrella, but they can't talk to each other because gubmint made it that way. | |
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bigunk
Gort, Klattu Birada Nikto
join:2001-02-10
Santa Clarita, CA
·AT&T Yahoo
| Re: broadband for everyone said by KoolMoe :
Maybe a bad idea - you didn't say why it was.
If under the same 'corporate umbrella', then that's not taking it far enough. They should be entirely different companies. You should totally be able to chose who you use!
As is, we hear an awful lot about SBC/PacBell showing preferential treatment toward the DSL users who also use PacBell for dialtone.
I do think it's silly to force different entities when still of the same company - all that will do is increase difficulty of communication with none of the competition benefits a true split would (should!) bring.
KM
It's not bad in concept, only in execution, as evidenced.
The three are separate entities in the eyes of the law. I agree there should be more of a separation, but here we have a quasi separation and they won't even deal with each other. So how can an absolute separation help? More rules? Thank you, but gubmint already screws things up too much "in the name of fairness."
I am all for competition, and I believe it can (and does) help the overall landscape, but the way it shakes out is almost always detrimental. A perfect example is the electrical market here in CA. Unless you are powered by the monopoly (LADWP), you are screwed.
The benefits (or lack of) can go either way. It's a tough call... | |
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boogie74
join:2001-06-19
Neenah, WI
clubs:
| quote:
Are the CLECs allowed to build out in the same, unrestricted manner that an ILEC would. Meaning, do they have the same "Rights of Way" and the like? Also, if the CLECs were to "build out" as some describe, I would imagine they would still have to deal with the ILECs to get the last wires to the house, destroying everyones yards in the process.
Those who suggest that the CLECs just build out their own infrastructure are not being practical. The ILECs, through their MONOPOLY status were given certain privaleges to build out the network. They were allowed to make a profit on building out this network (cost plus), and they were then allowed to keep the network to themselves after deregulation.
Actually, as per US Title 47, Chapter 5, Subchapter 2, Part 3, Section 271, Subsection (c)(2)(B)(iii), the Bells are required to offer:
quote:
Nondiscriminatory access to the poles, ducts, conduits, and rights-of-way owned or controlled by the Bell operating company at just and reasonable rates in accordance with the requirements of section 224 of this title.
The fact that very few CLECs take advantage of this does not negate the fact that they have just as much capability to use public and/or private right-of-ways, pole usage, conduits, etc. The Bells don't have the advantage you mentioned.
In fact, the whole argument that Congress never wanted for CLECs to deploy their own wires to the home is null and void- as that requirement in and of itself INVITES CLECs to do so.
Boogie | |
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Catmando
Catmando
Premium
join:2002-10-22
Montgomery, IL
clubs: | I suppose you have the money for a new DSL Infrastructure. | |
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BBC4544
join:2002-03-12
Saint Peters, MO | my post was in reference to broadband regulation not labor laws, you may have accindently posted on the wrong site, apology accepted | |
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Robert C
@swbell.ne
| Sure get rid of Govt. involvement. Look at the wonderful situation California has due to energy deregulation, and you think telecomunications and broadband would be any different? Due to deregulation it now take 2 companies in Texas to do what one used to do. I have 3 choices in companies to choose from for my power. A forth company that actually maintains, connects, and turns on the power. After paying a $200 deposit, It was a week and a half before my power was turned on. If you want to see the same price gouging in the telecom industry as Reliant Energy, Enron, Duke Energy, and others did in California, keep pushing for deregulation. Oh and by the way there never really was a shortage of power, we were just led to believe there was. | |
| jsouth
Jsouth
join:2000-12-12
Wichita, KS
|  Vote!
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Maxo
Your tax dollars at work.
Premium,VIP
join:2002-11-04
Tallahassee, FL
clubs:
·Embarq
| Regulation From what I understand the regulation that is in effect in most states is very unfair to the ISPs. I don't see why people think it has to be one extreme of the other. How about logical regulation that helps promote both the consumer and investor. It doesn't have to be regulate the sh*t out of the corporations or don't regulate at all. How about intelligent regulation. No regulation allows for a monopoly while too much regulation forces the companies to not even offer any service at all.
From what I understand in many places the ISPs are forced to sell their lines for below what it costs to put them there and mantain them. So if we were to regulate in a way that encouraged competition and also gave the people who own the lines some benefits as well then everyone would win.
--
»www.tfn.net/~jdbaucum | |
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garagerock
Premium
join:2002-06-14
Louisville, KY
| Re: Regulation quote:
From what I understand in many places the ISPs are forced to sell their lines for below what it costs to put them there and mantain them
See, therein lies the rub. That's what they would have you believe, but judging from the PUC reports that have been posted, I don't buy it.
Maybe when they provide hard evidence to the contrary, I'll reconsider. Until then, I see it as bullshit smoke and mirrors. | |
| | petecellar
join:2002-10-15
Philadelphia, PA | Well, de-regulation of cable television was a joke. It's still an expensive monopoly.
Also, the whole "frames" debacle makes them losers. That's like saying all auto makers must pay Ford co. since they made the first cars... | |
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Maxo
Your tax dollars at work.
Premium,VIP
join:2002-11-04
Tallahassee, FL
clubs:
·Embarq
| Re: Regulation If you pay millions to lay down lines and set up DSLAMs etc. Then you shouldn't have to let others use it for below the cost to put it there and maintane it. I don't know the exact cost/maintane ratio but that's just what I hear from reliable sources. I do think that SBC is full of crap when they talk about how bad they have it, but I also don't think they should have to lease out the lines below cost. I'm definitely not a fan of deregulation and believe in regulation it just needs to be sensable regulation.
--
»www.tfn.net/~jdbaucum | |
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garagerock
Premium
join:2002-06-14
Louisville, KY
| Re: Regulation Thing is, that's exactly what they asked for in TA'96 as a concession to get into the (what they thought) lucrative long distance market.
I agree with you that sensible regulation is always a good idea. My fear is that they will just throw out the baby with the bath water on this in the name of "deregulation" and we'll all wind up back on T-1's at work and ISDN at home.
Perhaps wireless will make all of this moot. | |
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Maxo
Your tax dollars at work.
Premium,VIP
join:2002-11-04
Tallahassee, FL
clubs:
·Embarq
| Re: Regulation quote:
Perhaps wireless will make all of this moot.
That's what I'm forseeing anyhow. I definitely wouldn't invest in DSL or T1 if I was into investing. I think broadband is the future with hard lines only for business and mission critical connection, or whomever must have a solid-low ping connection that won't deteriate with bad weather.
--
»www.tfn.net/~jdbaucum | |
| | | | moonpuppy
join:2000-08-21
Glen Burnie, MD
·Verizon Online DSL
| What about long distance voice service? Should we have separate lines into the house if we don't want to use our local phone company for long distance service?
As I stated earlier, DSLAMs and lines were put down with money from consumers given no choice in their phone service. You couldn't until very recently get local phone service from anyone else but the local phone company. It takes a Public Service Commision to keep rates in check. Otherwise, we would have bad service at expensive rates. | |
| | | | fgoldstein
join:2003-01-21
Newton Highlands, MA
·RCN CABLE
| > I do think that SBC is full of crap when they talk about how bad they have it, but I also don't think they should have to lease out the lines below cost.
There are two different issues here.
1) Common carrier status: The LECs (ILEC and CLEC alike, though nobody really cares about CLECs in this regard) are both Common Carriers, which means that they must provide service on a basically nondiscriminatory basis to anyone requesting the service they sell. Thus SBC's DSL is available to all ISPs, who are their customers (well, "ratepayer" is a better word), even though the ISPs also compete with SBC's ISP subsidiary Prodigy. The ILECs want DSL to be demoted to non-common-carriage, so they can kick off ISPs and thus have total control over the CONTENT of consumer ISP service. Think "Great Firewall of China", only for profit-maximizing, rather than strictly ideological, reasons.
2) CLEC access to plant. CLECs today can lease copper loops in order to provision their own DSLAMs, which they can, in turn, offer to ISPs (their own and independents; think Covad). They can also lease ILEC voice switches -- the so-called UNE Platform -- at a "cost-plus" rate. (UNE-P reduces ILEC margins, but it's supposed to be priced above cost, based on the TELRIC formula which does include a rate of return.) But UNE-P does NOT include ILEC-owned DSLAMs, so it is really irrelevant to broadband, except that ILECs refuse to supply DSL atop UNE-P voice lines, as a way to discourage UNE-P. Now the ILECs would like to cut off CLEC access to the raw loops, giving themselves a monopoly on DSL service. (Combined with item 1 above, they'd have a monopoly on ISP content as well. It is of course preposterous to expect CLECs to overbuild copper loop plant! It is a natural monopoly; that is recognized by the Telecom Act's unbundling requirement.)
The price CLECs pay for raw loops is above cost, based on TELRIC. The current recurring price for accessing shared loops for CLEC DSL is at or near zero. That's because the ILECs were asked to impute a cost to their own DSL subsidiaries, and set it at there; the Kennard FCC then applied that price to CLECs as well. Hoist by their own accountants' petard. | |
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ib50MbSoon
Formerly TwoKDialup
Premium
join:2002-06-07
Coloma, MI
| Re: And they own 'frame' technology for websites said by RayW :
see »zdnet.com.com/2100-1106-981446.html for one news article.
Exactly! And in my opinion, their fees to use a menu in a frame on a Web page are ridiculous.
FWIW, they want $180/mo (ISP extra) for a 128kb ISDN line in my area.
I wonder what the new, unregulated SBC will charge for a 768kb DSL line?
--
Earthlink/DirecWay SRS | SatMex 5-990 | Win2K - ICS on Celeron 500 w/192MB -> Netgear RO318 -> Home network | |
| averagedude
join:2002-01-30
Mesa, AZ | It is our turn to bait and switch I say give them everything they want so that all the rural areas get connected - then change the law back.
That is fair play, they have been bait and switching us for years, now it is our turn. | |
| 
mr sean
Professional Infidel
Premium,ExMod 2001-07
join:2001-04-03
N. Absentia
clubs:
| Quote of the Week said by Randy Tomlin:
It is not deregulation. It is a removal of an opportunity to regulate
They are probably still laughing at that one in San Antonio.
--
One riot; 71 Rangers. | |
| 
rit56
join:2000-12-01
New York, NY
| deregulation open up there books and let us see how much they're costs really are. I just don't understand why certain people posting here believe a monopoly when they say they only make a dollar per line they farm out. lets see the books and let them prove it prior to deregulation. | |
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David
No,there is another.
Premium,VIP
join:2002-05-30
Granite City, IL
clubs:
 ·DIRECTV
 ·magicjack.com
·AT&T Midwest
| JMHO again as usual Suppose for a second you have a developer that wants to put in a new shopping center in an area that has homes in it already. The only thing that keeps you from doing that is exclusive rental prices to that area, after all you have to pay to dystroy the homes that are there (eminent domain last I checked) and reloacate these people to new homes. So if we decide as homeowners to sign a petiton to keep my home, then I am the one peeing in the pool to keep the developer from creating jobs, bringing revenue to a community, and turning the land into something better.
However I feel no shame for AT&T or MCI/Worldcom, both of these companies have (or should I say had) the money to build the alternate network. AT&T may be doing this with cable, and they push a lot of money in congress's face to ensure they are not regulated. Another thing I do not understand about AT&T is they bought all the fire saled Northpoint DSLAMs and equipment, what did they do with it? Nothing.... So who is the crook here? Maybe they are waiting for regulation to change for thier favor then they activate that equipment buy out SBC, then everyone does not win. Keep in mind this is only a theory at most, but could be a very viable and good business option. After all if you cannot beat them join them, or buy them out. Then what choice would you have? At&t the unregulated cable, and the regulated telco. Your choice? ok same pocket I do not care.
MCI/Worldcom- well that will revert to what my mother always said to me as a young lad (once a crook, always a crook) do you really think thier "100 day plan" is going to work? Really I think I saw a pig fly by the building while ago. I think MCI/Worldcom should sell UUnet to a responsible party and get out of the business all together. They took the public and defficated all over them. Yet they get "restructuring" and bankruptcy protection and all is ok again. They get to keep the equipment that ran them broke and start over. They do not have to pay a dime back.
I am not stating there are any innocents here, I have my own opinions. This is what I was thinking at this point.
Just my $0.02
--
11/02/01- The day I went into surgery. 1:45 P.M. the day I will never forget, life changed, forever. Today 11-2-02, Current weight 346.3, Total loss: 237.7, 18 inches less on my waist, noticing that I am 1/2 size? I wouldn't give this up for the world | |
| 
DarkFiber1
A T T Support
Premium
join:2001-12-30
Saint Charles, MO
| hmmm I agree with you first part there. But I don't see why we can't let a company like WorldCom "come back" into the industry. You say they have to pay nothing back, well they do, filing chapter 11 does not mean that they forgive all debts in all cases, especially WorldCom's. They have to pay all these debit back, they just get a little time to do it. And why not, is it the name that you don't like, I mean these are jobs, WorldCom did not lay off everybody! Look at Birch for example. After coming OUT of bankruptcy 4 months ago they are now merging to form the nations largest CLEC, making a strong comeback and providing jobs to thousands.
Now if these regulations were not there, I don't think every clec is going to close shop and go away, they will adapt, maybe invest a little in their own network.
My 3.5 half-dollars | |
| Tom Zachman
join:2002-12-01
Dodge City, KS
| Public Owned Fiber Networks FTTx is such a dynamic delivery system that it should not be owned by private enterprises, especially if they're not regulated.
The buzz word is DSL, but it's much more than that. Chairman Powell still thinks we'll have multiple pipes in our homes, but that's simply not cost effective. A single fiber will deliver much more than even tomorrow's needs. So, whoever is positioned to be there first will severely curtail competitive dollars in parallel infrastructure.
The Bells really don't want FTTx because it will render their switching technology and core business model as obsolete. They will deliver DSL over a fiber backbone and be poised to drop fiber, but not until they recreate themselves and find another time or data-transfer sensitive cash register.
The problem with private fiber is:
Who is the gatekeeper?
Who controls the content that will be available over this pipe?
What sweetheart deals need to be made to pump content into it?
How will future browsers be able to corral the less savvy users into their ad. rich environment?
Will the web morf into a centralized content deliver system? like original radio broadcasting morf'd
Will the Web remain an open experience like it is today? Or will the Content Providers sit around a big table with the bells?
--
"These are complex issues. If you are not mentally up for it, there is a simple proxy that will work just as well as a firm grasp of the technical and business issues: "Figure out what the Baby Bells want (they will tell you) and then try to stop them." | |
| DSL Oberst
join:2001-11-29
| I Can't Blame SBC After all, their arguments makes sense from a financial standpoint. It will a) cost money for SBC to extend the network to the rural towns for DSL, and b) it will be hard for them to make a profit they want without guarantees of regulation not being an issue. I would compare it to McDonald's - this town's not going to make us the money we want unless we ensure Wendy's and Burger King stay out. If were either of the two, I wouldn't bother until I received some sort of legal guarantee that I wouldn't be undercut.
They are providing their legal mandate to make sure voice service is available. DSL.....well, I can't really agree with the company be made to make sure a luxury is available. | |
| |
ib50MbSoon
Formerly TwoKDialup
Premium
join:2002-06-07
Coloma, MI
| Re: I Can't Blame SBC It appears that some telcos might be fibbing a bit about how much it costs to upgrade an exchange for DSL.
»www.isp-planet.com/technology/ds···ess.html
If the telcos get their way, they will basically own and control access to the Internet.
--
Earthlink/DirecWay SRS | SatMex 5-990 | Win2K - ICS on Celeron 500 w/192MB -> Netgear RO318 -> Home network | |
| | another Joe4
join:2003-01-13
Troy, MI | I like your analogy but, your leaving out that the Mcdonalds would have to let Wendy's and Burger King use their grills, fryers and 16 year old zit poppers. | |
| mschuermann
join:2003-01-24
Mission, KS
|  These are all lies!!!
SBC convinced Oklahoma to eliminate regulation on the state level. This really means nothing right now for a number of reasons:
1) As of right now, SBC sets all their tariff rates anyways. They propose them to the state PUC and they almost always are approved. So, this actually changes nothing in that sense..
2) SBC made how much profit last quarter? Their profits were "down", but that was from $9 billion to $6.1 billion (or something very similar). Keep in mind that this is in 3rd quarter 2002. Just the quarter.
3) That huge chunk of change promised to Oklahoma that was set aside the day after the bill passed? Well, as soon as they announced their profits had decreased, guess what got cut? That's right...
When are the states going to wake up and see that they are being blackmailed. If they really wanted to play ball, they'd pass laws requiring the RBOC's to 1) Prove their actual costs for leasing lines. or 2) Put pressure on the feds to force the RBOC's to spin off their infrastructure divisions into a separate, independent company responsible for leasing lines and facilities to ALL companies, including the ILEC.
my two cents
Michael Schuermann | |
| | Tom Zachman
join:2002-12-01
Dodge City, KS
| Re: These are all lies!!! You're right Michael.
BTW, Are you in the "Dust Bowl" too? The last dust storm I remember "out west" was in the spring of '57. It blew in with the leading edge of the weather system that brought us the "Blizzard of '57" and that one was big.
What we produce is:
Airplanes (Boeing, Cessna, Raytheon, Lear-all here)
Natural Gas and Oil
Most of the worlds Beef
A lot of the worlds Pork
Wheat, Corn, Soybeans, Milo (which a large part is converted to adhesive for sheetrock/wall board-also made here)
You can also refer to us as "The Nation's Heartland" 
--
"These are complex issues. If you are not mentally up for it, there is a simple proxy that will work just as well as a firm grasp of the technical and business issues: "Figure out what the Baby Bells want (they will tell you) and then try to stop them." | |
| drivedacar
join:2002-05-29
Grafton, WI
|  To regulate or not.....
There is only 2 words one really needs to know in order to answer the question of whether to regulate or not.....
SOUTH KOREA (you do the research).
Another word to look at when trying to decide if regulation is a good thing....Roadrunner (or ANY cable MSO)
These are 2 examples of what happens when ALL incumberances are removed from the NATURAL process. Things will flourish. Price will go up most likely......but then again wasn't a gallon of gasoline once only 35 cents?
I wouldn't worry about the price of DSL going up significantly because it won't. The only reason SBC REALLY raised their prices was because the other CLECs couldn't sell their DSL service for as low as SBC was selling it for.
In any case, only 3 words are needed to explain why broadband deployment should be de-regulated - SOUTH KOREA and Roadrunner(or whichever cable service you'd like). | |
| |
boogie74
join:2001-06-19
Neenah, WI
clubs:
| Re: To regulate or not..... Unfortunately, the big argument most have for regulating more is "If you don't regulate them and force them to price things low, deploy services and sell them at dirt cheap wholesale prices, then no one else will invest in it- and if there's no one else in it, well... you know what will happen... DSL will be $80,000 per day."
People here are using the postulate (unproven) that if there isn't enough competition (real or otherwise) then companies with perceived monopolies will simply rape customers with huge rates and zero services.
This type of thinking sustains racial discrimination, poor foriegn policy thinking and just plain bad human relations.
Think about it- up until the last half century or so, it was considered a great risk to allow Blacks and American Indians to own weapons. Why?? Because if you let them have weapons, "Well, you know... They're dangerous people!" We even follow this type of thinking today- with bans on 3rd World countries having any type of modern weaponry (nuclear or non-nuclear).
Up until 1920 (Women's Sufferage), the thinking was "Don't let women vote- they don't know how to read half the time... and if women vote, well... you know what will happen- we'll have chaos and screwed up elections!"
It was illegal in many states to teach Blacks and American Indians to read! Back to the thinking of, "If this is allowed, well... You know what will happen- they'll be SMARTER! And then we're ALL in trouble!"
And now, we're applying this "logic" to the telecom world- "We MUST inject competition- no matter how false and unconventional it is... Because if those bad ILECs are allowed to have more breathing room and less direct competition (even for a fleeting moment!), Well... You know what will happen- they'll go back to the days of 'Joan the Operator' connecting calls- you don't want to go back to Lassie, do you??"
It must be nice to base policy and law on simple, unproven postulates.
Boogie | |
| | | fgoldstein
join:2003-01-21
Newton Highlands, MA
·RCN CABLE
| Re: To regulate or not..... >It must be nice to base policy and law on simple, unproven postulates.
Well, I learned that "postulate" in Microeconomics 102. It's pretty simple, really. When there's competition, "price" and "cost" (including the cost of capital, which is profit) tend to align. Competitive providers will enter an overpriced market. See Smith, Adam, The Wealth of Nations.
When there's no competition, the monopolist sets prices at a profit-maximization point. That's higher than cost, because as you move prices up from the competitive-level price, profit margins get fatter more rapidly than demand decreases. At some point up the curve, suppression of demand makes higher prices counterproductive. But it's a much higher price point than competition allows.
History also shows that ILECs would rather price "to the right of" the profit maximization point, rather than closer to cost, if they can get away with it. Witness the money they left sitting on the table pre-Carterfone when they wanted $25/mo for a 300bps modem, something at least that high for an answering machine, etc. They made jack squat, but had a 100% market share. That's what they coveted even more than profit. | |
| | | | Tom Zachman
join:2002-12-01
Dodge City, KS
| Re: To regulate or not..... All good points, Mr. Goldstein.
I know this is not news, but here in the "dust bowl" the majority (including elected/appointed decision makers) think we're legislating DSL. The cable and wireless ISPs have mis-labeled their product, and now we think DSL has competition.
You and I (and others here) know we really are looking at the turning point toward the de-centralization of the network's Intelligence. The Incumbents surely realize the future, and the fact that their two choices are:
)Continue under the current rules of TA'96 and wither out of existence
)Play their "I'll build it [FTTx] for you" card that creates an opportunity for them to implement delay and foster hesitation in competitive Cap-Ex resources until they re-invent themselves from Switching services into Content Providers
--
"These are complex issues. If you are not mentally up for it, there is a simple proxy that will work just as well as a firm grasp of the technical and business issues: "Figure out what the Baby Bells want (they will tell you) and then try to stop them." | |
| | fgoldstein
join:2003-01-21
Newton Highlands, MA
·RCN CABLE
| South Korea's broadband is not a monopoly. Broadband penetration there in general benefits from competition, which keeps the price under control.
The reason their DSL penetration is high is not because they aren't "regulated". In the USA, the price of broadband is not regulated! DSL is under FCC, not state, jurisdiction, and the ILECs (even SBC) get to set their own prices. The only "regulations" are their common carrier status and the unbundling requirement of the underlying plant (not the DSL service or DSL-specific facilities).
Korea's DSL penetration benefits from their high urban density. The non-rural population tends to live in apartment houses, not single-family homes on half-acre lots USA style. This keeps down the average loop length, so loop qualification -- maybe 50% in the USA -- is much less of a problem. It's also easy to stick a DSLAM in an apartment house. | |
| joeking57
join:2000-10-09
Nicholasville, KY
·Windstream
| not sure where this fits into the chain but... What is regulated by the state govs, deregulated by the FCC, expected by stockholders to show a good return and guarantied profit, and leading the nation in jobs downsized in the last 2 years (over 25% of all the jobs lost in America in 2002-03)? That's right it's your local telephone companies.. I have worked for 1 for the last 23-24 years, but at this point I'm no closer to retirement than I was when I hired on in 1979. I believe in free enterprise, but does such a monster really exist in America today? I'm not a socialist, communist,hardcore unionite, or greedy stockholder. Just the average Joe Schmoo who went to work at a telecom thinking one day I might get to retire. LOL several mergers, 1 sale, and 15 years of deregulation later I'm still scratching my head trying to figure out who really cares about customer service other than a few of the hourly workers like myself haven't totally given up on the concept of craftmanship. All we have left to take pride in is what we can do at a local level since our leadership is so bogged down trying to outguess the market, the state and federal governments, and their ability to get any work done with a skeleton crew that they can't see the forest for the trees. Everything has it's price... in America we live by the golden rule, HE (or She since 52% of the wealth in our country is owned by women) who has the gold rules! Instead of complaining about a company that wants to make a profit, a government that wants to provide competition in the market place, or the poor consumer; does anyone have a legitimite workable suggestion about expanding services to rural areas in a way everyone can benefit from? These issues are not as simple and 1 sided as they seem, if you are in a money market or 401k account at work you too may be a phone company stockholder. We all have access to our government although not at all equally (refer to the golden rule). Try emailing your representative with an informed opinion but you had better make sure and do your homework first, I'm sure the SBC powerpoint show was very convincing. And please could we not denigrate into name calling and insults here at dslreports forums, I believe the nationally syndicated radio talk shows are a much better forum for that. I don't have any answers myself just a lot of questions. Remember my retirement? When we got sold from Verizon to Alltel my vested funds got transfered at a frozen level. Since expedential growth in any investment occurs in the end stages of the time frame and I'm frozen in a vested program I can't touch, and I'm just under a year into the retirement program for my new employer, when will I ever get to enjoy the good final stage growth that will allow me to retire in comfort after 30-40 years of jumping thru federal, state, and corporate hoops? All the upper management folks at these companies have profited greatly over the years, but I am still seeing many Lucent and ATT craftsman who lost everything when their 401k accounts tanked due to the rapid drop in telecom stock values, who have been forced back into the workplace as contractors without benefits in order to make ends meet. I'm still full of questions does anyone have any answer? How will the telecoms function when the last pocket of highly skilled and trained employees retire and because of constant downsizing there are no young folks to take over the business? Just wondering? Where is all this great money the phone companies are raking in all going to? By now I so far off track I probably lost 95% of the people who started reading this 10 minutes ago, but if you're still here at the end, please send me some answers. Thanks and have a pleasant tomorrow. | |
| | Tom Zachman
join:2002-12-01
Dodge City, KS
| Re: not sure where this fits into the chain but... .....does such a monster really exist in America today?
Post WW2 we were lead to believe that the Corporation would take care of its' employees, and Social Security benefits were tax exempt, and our leaders would never lie.....
Your leaders aren't blind. Stupid? Not totally! But they missed their golden opportunity to embrace the agents (CLECs) that were anxious to go work the front lines with Customers. Then, they should have positioned themselves as Wholesale Only, and focused their internal personnel (You Joe) and resources toward deployment of gigabit ethernet to the end of the last mile. Judge Harold Green's Modified Final Judgment is where Your industry executives Blew It by becoming defensive. But these executives never thought about "Adaptability, Adoptability and Flexability" in the marketplace. Hells Bells, they threw out the best visionaries they had because A-A-F wasn't an option. They had a War to fight after Judge Green changed the rules.
.....expanding services to rural areas in a way everyone can benefit from?
It's happening Joe. Whether or not My Legislators drink from the Bell's cup, rural broadband will be delivered. Ultra Wideband Wireless will gain favor as an option to "Delivering The Bits" in a competitive marketplace. Please know that the marketplace now wants Photons, not Electrons.
Remember my retirement? ...when will I ever get to....retire in comfort....?
Anyone from WorldCom, Enron, K-Mart, Montgomery Ward, F. W. Woolworth or Studebaker care to answer? I'm not trying to be funny or cruel Joe; many giants have fallen.
I'm still full of questions does anyone have any answer? How will the telecoms function....(when) there are no young folks to take over the business? Just wondering?
What business will be left when Gigabit Ethernet's plumbed into the "X"? What function will a 64K voice grade circuit switch perform?
Where is all this great money the phone companies are raking in all going to?
It will go to your leadership who currently are "so bogged down trying to outguess the market, the state and federal governments".
--
"These are complex issues. If you are not mentally up for it, there is a simple proxy that will work just as well as a firm grasp of the technical and business issues: "Figure out what the Baby Bells want (they will tell you) and then try to stop them." | |
| | | joeking57
join:2000-10-09
Nicholasville, KY
·Windstream
| Re: when giants fall "WorldCom, Enron, K-Mart, Montgomery Ward, F. W. Woolworth or Studebaker care to answer? I'm not trying to be funny or cruel Joe; many giants have fallen." I'm not talking about the price per share of stock, just the value of your vested pension which freezes at 24 years and now starts with a new company a 1 day even though my previous employee continues on in business. Here's the problem with when giants fall my friend, it's always the little people holding them up that get crushed in the rubble. Everyone was happy to get deregulation and pay less for long distance and have choices, but these same folks are the ones who cry the loudest about the decline in quality of service. Does the phrase you get what you pay for ring a BELL (or maybe even a Verizon)? It would be wonderful to have your cake and eat it too, but unfortunately life and business don't function that way. Poor CLECs I really feel for them, what have they invested in time or infrastructure? | |
|
LegoPower77
Abecedarian
Premium
join:2002-08-03
Arlington, VA
|  Who regulates the regulators?
In this discussion I am stuck by many people's view that government regulation is the only way to protect the consumer against the eeeevil corporations. Two things come to mind. Who pays corporations? That's right, we do, so they better make us happy. Second, how is a politician any less susceptible to greed and self interest? Corporations don't have threat of violence; government does —I'd rather trust the former.
The history of regulation shows that firms lobbied for it when competition reduced their profits. In 1897 the National Electric Light Assn. began lobbying for regulation and for "fair profit" price controls by the various states. The same scenario for the telephone industry (Ma Bell was a product of regulation, you big-governmenters). Actually, the first states to adopt regulation were the ones that had low profits and high output. The effect was to increase price and reduce output.
People make the case for regulation based on the natural monopoly argument. They say that (as in the case of electricity, natural gas, broadband), because of the expense of building such large transmission networks, the natural state of things is to have a few large firms. In order to protect the consumer, the state needs to regulate, usually by granting exclusive license and with price controls that guarantee "rate of return" (ROR for short) profits. The question comes to mind, if these were "natural" monopolies, then why the need to restrict entry?
In a free market —one with no barriers to entry, the "monopoly" firm always would have to guard against upstart competitors seeking a part of their monopoly profit (which is why you'd never see $200/month broadband). In economics, we call this the contestable markets theory, for which there is much empirical support.
The problem with price controls in this case is that they create the wrong incentives for the firm. ROR pricing is based on historical prices, not the current technology. If an industry is unregulated, when there is rapid technological advances, the old facilities become obsolete before their historical cost is fully depreciated. Firms abandon obsolete facilities sooner than if there had been no advancement. But under an ROR regime, the older facilities are protected by the averaging of their cost with the cheaper newer facilities into the rate structure. This has two effects that are exactly the opposite of what advocates of regulation say they want. First, since the older facilities are not abandoned and their cost is averaged with the newer ones, the price does not go down as quickly as it would if the old facility was abandoned altogether (assuming the new technology makes the product cheaper). Second, because of the guaranteed ROR, firms are more willing to try risky new technologies because they are less sensitive to cost overruns since the consumer is made to pay for it anyway.
Firms operating under regulaton are less motivated to control costs than they would be in a competitive market and they do not abandon their older, inefficient facilities as readily. Prices under ROR regulation are set by adding capital cost and a profit rate to other costs, thereby attempting to reverse the competitive process by which prices determine the amount of capital cost one can profitably afford to incur.
The point of all of this is that it's better to live with a temporary monopoly, subject to free entry, then to have Leviathan with threat of force limiting our choices and stifling innovation.
For further elucidation
--
"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." —Ronald Reagan
[text was edited by author 2003-02-07 10:31:29] | |
| eze16
join:2002-12-09
Coal City, WV
| Buckle up or fall OUT !! Anyone going into business; especially Broadband,it should be like electricity,if you are going to be a supplier you (HAVE) to supply the rural areas with the same package as the populated areas. If not don`t start the business,yea I know some of you don`t like it when people say things like this but,This country is supposed to serve the rich to get rich are we not !! If you don`t want to give the same package to everyone you should NOT cry to the little man to take up for you so you can get what you want by telling us that you would give me the same package as you do the easy to get to or cheaper to serve ,if you could afford it .If you can`t offer the same package to the rural as the populated areas don`t try to get us on your band wagon ,so you can get what you want.If you can be fair and serve us all with the same offer at the same PRICE then get out of the business TODAY. An old saying goes like this you know what DOG you hit when you through a rock in the middle of the pack ,the one you hit always comes out SCREAMING !! | |
| hackysak
Premium
join:2002-03-23
Summit, NJ
·Verizon FIOS
| Can CLEC's provide phone service due to this deregulation?? If CLEC's are forced to run all new wires to the houses, then they should be given the opportunity to offer phone service. Cuz GOD KNOWS, I'd switched all of my phone service to them in a heartbeat. If, for nothing else, just to spite the local telco.. I have chosen Covad for a reason, they have exactly the product I was looking for at a price I was willing to pay.. Verizon currently has all of my phone service (and they get a pretty penny for that)...
In the end, if the CLEC's can offer phone service, the local teco's might just have shot themselves in the foot..
I'm seriously getting tired of what seems to be dwindling alternatives for me, the consumer. I only have one choice of cable provider, Comcrap, which is why I don't have High Speed cable Internet access (used to, when they had service provided by @home.). I was extremely happy to find DSL was offered in my area.. When I checked at Verizon they didn't offer the speeds I expected and they didn't offer static IPs (I think they may offer one static these days). So, when I found out I could get DSL from OTHER providers with higher speeds and additional STATIC IPs I was delighted. Signed up immediately and have been happy since.. Granted I was with Megapath at first and have just recently switched to Covad (due to price). However, it's nice that I was able to have the CHOICE. | |
| 
tschmidt
Premium,MVM
join:2000-11-12
Milford, NH
 ·Hollis Hosting
·Verizon Online DSL
·Fairpoint Communic..
| Thoughts on next generation broadband network A lot of interesting points have been made in this and other threads concerning the many issues involved in rolling out next generation high-speed network. But I fear too much emphasis is being paid to near term issues and not enough about the long-term world we are creating. Much of the battle being played out by the Cablecos and Telcos revolve around nuanced technical issues resulting in their desire to extend the life of their legacy network. These are awkward transition steps to the holy grail of true high-speed network to every residence and business.
In my mind there are three critical aspects to next generation network: transparency, availability, and price.
Transparency
As the Internet becomes more important to everyday life we need safeguards to insure transparency. Transparency means first-mile access provider must transport any technically valid data delivered to the network. The carrier is not allowed to pick and chose what is carried and what is refused.
Here is the example I used in another post. In the early days of the country roads were privately financed and the owners charged a toll to use the road. Some owners went further not only did they charge a toll – they varied the change based on who wanted to use the road. So if my brother in-law were in the grain hauling business I’d charge competing grain haulers slightly more eventually driving them out of business. Even a modest increase charged to competitors is enough to eventually drive them out of business.
Transparency is critical for another reason – to prevent first-mile network owners from becoming information gatekeepers. As the Internet matures more and more information will flow over it. The Internet is a very democratizing technology. It dramatically reduces publishing and access cost. It bypasses the traditional middlemen that used to control how authors and artists connect to patrons. The Internet promises to expand the number of voices by reducing entry barriers. But this will only happen if first-mile access providers are prohibited from limiting who is allowed to connect and how they are able to use the access network.
Regulating transparency is relatively easy and nonintrusive into business operations. The carrier cannot refuse to carry legitimate traffic, they must allow anyone to connect at the edge of the network, and they cannot provide preferential treatment to business partners.
Availability
Building the next generation network is a substantial undertaking and those who invest require a reasonable rate of return. Estimated cost of FTTH is between $1500-3000 per home. The US has about 110 million residences requiring a $200-300 Billion investment.
Focusing on the current battle between the Cablecos and Telcos overlooks the fact there is no incentive to build two next generation networks. Once a FTTH network is installed there is no financial incentive for a second player to enter the market. Building a second network does not expand market size it simply splits a given market between two competitors.
Much of the cost of deploying FTTH is in installation labor. Fiber installation costs will come down but not all that dramatically. The lower estimate for FTTH is already near telephone company copper loop costs today. This means a late entrant into the market is unlikely to benefit from dramatically reduced cost. I think this is one of the reasons to RBOC are fighting so hard to kill the CLEC business. If a CLEC actually built an overlay network the RBOC could not justify building a second network.
A mechanism must be found that encourages raising the substantial capital needed to deploy the network and at the same time remains responsiveness to the public good in the absence of local competition. This is the “natural monopoly” problem much the same as water, sewer, roads, power distribution, airports etc.
Pricing
The track record of government price control has not been particular effective. It is too easy for the regulated entity to play a shell game with regulators. This is exemplified by the battle over TELRIC – the method used to price unbundled network elements. The method has been upheld buy the Supreme Court and implemented by state PUCs after numerous hearing giving the RBOC every change to argue what their true cost is. Yet the RBOCs are still crying foul and that pricing is set below cost.
Quite frankly monopoly dominance is often accomplished by technology advancements resulting in very low prices. Railroads and early Oil are two examples that come to mind. Prices were actually low compared to competitors because the monopolies exploited newer technology. As Fred Goldman point out regulating price distorts business practices.
Given local competition is unlikely need to find other ways to prevent aggressive pricing. Rather then attempting to determine what the “correct” price should be all pricing must be transparent – this prevents the monopoly from engaging in discriminatory pricing practices. The size of each monopoly should be limited – say no larger then a state. This way even though competition does not exist at the local level one is able to compare prices to curb egregious abuses. Municipal ownership is another way to create network ownership that is responsive. Perhaps the state PUC could have a seat on the corporate board.
Golden rules for next generation high-speed networks:
Data Transparency
Non-discriminatory access at the edge
Effective price pressure without local competition
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