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FCC Ignored Competition to Focus on Adoption, Fails at Both
by Karl Bode 12:18PM Monday Aug 19 2013
For most of the Obama administration the FCC under recently-departed boss Julius Genachowski ignored the industry's biggest problem (a lack of competition leading to high prices, poor customer support and bad behavior), and instead followed the industry's desire to focus instead on adoption. To hear the industry tell it, the U.S. broadband sector is perfect; all we need are programs aimed at ramping up adoption (effectively glorified government subsidized ad campaigns for broadband services).

As a result our rather underwhelming national broadband plan placed a high priority on focusing on adoption while ignoring competitive gaps leading to high prices, just as the industry wanted it. The result has been unsurprising. As the New York Times points out, we've seen little to no traction in adoption, thanks in large part due to high prices:
quote:
Since (2009), however, the (broadband adoption) number has not budged, shifting between 74 percent and 79 percent through 2011, according to one study by the Pew Internet and American Life Project. Pew’s most recent research shows the figure fluttering this year between 81 percent and 85 percent, a slight uptick that experts attribute to the still-growing popularity of smartphones. Most smartphone users also have home connections, however, and do not face the affordability or digital literacy problems that have caused Internet adoption to remain stagnant.
While there will always just be people who don't want broadband (most notably the elderly and particular religious groups), The Times proceeds to offer up numerous anecdotes of people who remain disconnected because of high prices. Far too many rural markets pay $50 to $60 for 3 Mbps or less, with telcos increasingly forcing landline bundling and applying usage caps, which are driving costs up further. The result is a large contingent of poorer rural Americans who really can't afford it during a recession:
quote:
Gloria Bean, 41, an elementary school teaching assistant from Calhoun City, Miss., said cost was also a reason she had not had Internet access at home for three years. "I just couldn’t afford it,” she said. Being cut off, she said, “has affected me and my children.”

“They have to have it for school to do research for a paper or something they need for class,” Ms. Bean said. As a result, she added, she often rushes from her job at school to pick up her children and take them to the library, where there are 10 computers.
The Times however can't be bothered to tie that continued price issue to the fact the government refuses to seriously address the industry's lack of last mile competition in most markets. The FCC has spent a decade ignoring its own research-driven solutions (like trying to push for open access models), ignoring predatory pricing and caps, and failing to impose real merger conditions (an area of clear authority). It's rather hard to improve sector competitive shortcomings when you spend your days ignoring they exist.

The press enjoys "helping" by ignoring obvious truths when reporting on the sector. In fact, you'll note the Times fails to mention the word competition even once. The head in sand behavior by the press and government is because they're afraid of upsetting a broadband industry that spends millions annually protecting the status quo, insisting the U.S. broadband market is picture perfect.

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silbaco
Premium
join:2009-08-03
USA

1 recommendation

Internet

If you can afford to buy internet access on a smartphone, you can afford to buy residential home internet.
dplantz

join:2000-08-02
Roslindale, MA

Re: Internet

Agreed here. He may have a prepaid plan which includes it. I will give my Directv before I will give up internet access. Too useful, plus I need it for my home business to function

FFH
Premium
join:2002-03-03
Tavistock NJ
kudos:5

1 recommendation

News article picks poor example for subsidizing broadband

»www.nytimes.com/2013/08/19/techn···all&_r=0

"I am cheap," said Craig Morgan, 23, a self-employed carpenter from Oxford, Miss. So far, he has made do without the Internet at home, but while he has used a smartphone to connect, that has limitations, he said.

“When we came home from the hospital with our new baby two months ago,” the hospital “took pictures and put them online,” he said. “We had to go to my in-laws to order them.”

{sarcasm} Well, that is certainly a good reason to make taxpayers spend more money to subsidize lower prices for the cheap, or poor. Making sure that people can order online photos.{/sarcasm}

So let's see: He has money for a smartphone; money for wireless data; money for overpriced baby pictures when he could make his own; but no money for wire based broadband.
--
"If you want to anger a conservative lie to him.
If you want to anger a liberal tell him the truth."
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1

Re: News article picks poor example for subsidizing broadband

said by FFH:

»www.nytimes.com/2013/08/19/techn···all&_r=0

"I am cheap," said Craig Morgan, 23, a self-employed carpenter from Oxford, Miss. So far, he has made do without the Internet at home, but while he has used a smartphone to connect, that has limitations, he said.

“When we came home from the hospital with our new baby two months ago,” the hospital “took pictures and put them online,” he said. “We had to go to my in-laws to order them.”

{sarcasm} Well, that is certainly a good reason to make taxpayers spend more money to subsidize lower prices for the cheap, or poor. Making sure that people can order online photos.{/sarcasm}

So let's see: He has money for a smartphone; money for wireless data; money for overpriced baby pictures when he could make his own; but no money for wire based broadband.

What does forcing open access requirements to enhance competition have to do with subsidizing? Where in Karl's article does he say anything about government subsidizing for the poor?

FFH
Premium
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Tavistock NJ
kudos:5

So, how should the FCC FORCE landline competition?

So, how should the FCC FORCE landline competition and/or set maximum price levels?

Let's assume, for arguments sake, the FCC should make it a priority to increase competition to the home for landline broadband connections. How will they go about this?

Do they have the authority to set prices without changes in the laws that set out their regulatory powers? Do they have the power to levy fees in order to subsidize the entry of competitors? Should they subsidize local municipal controlled competitors? Should the US nationalize Comcast, TWC, Verizon, AT&T, Google ownership of infrastructure, and make all broadband infrastructure a government run enterprise with the ISPs leasing access to the lines?

There are a lot of possibilities, but most of them are illegal and would constitute a governmental taking of private property.

So what is your preferred solutions out of all the possibilities?
--
"If you want to anger a conservative lie to him.
If you want to anger a liberal tell him the truth."
Skippy25

join:2000-09-13
Hazelwood, MO

Re: So, how should the FCC FORCE landline competition?

Forced line sharing at cost + a very small profit would be a good start.

Splitting the providing of the connection, providing of the services and providing of the content would be another good start.

Define illegal please, being that congress can change what is and isnt within their scope of duties that is a fuzzy line at best. Taking of private property certainly is not illegal. Imminent domain can apply to a company just as easy as it applies to a person, they are a person as defined by the stupid USSC, remember? I personally would love to see that happen.
rradina

join:2000-08-08
Chesterfield, MO

Re: So, how should the FCC FORCE landline competition?

Just to be clear, "taken" is a strong word. Forced sale of private property represents more clearly what could happen. The fifth amendment guarantees the government cannot just take your property without just compensation.

Of course the definition of "just" is subjective but it's not like one day you have something and the next day you have nothing to show for what you had yesterday.
Skippy25

join:2000-09-13
Hazelwood, MO

Re: So, how should the FCC FORCE landline competition?

Yes, by "taking" I certainly meant forced sale as you stated.
rradina

join:2000-08-08
Chesterfield, MO
In 1996 the FCC had the chance to make the central office to the consumer into a monopoly utility that allowed open and equal access at the CO. They didn't choose to do that and IMO, that was a huge mistake. Instead of creating a regulated utility whose interests were focused on maximizing the services delivered through their assets, we established ridiculous geographic regulated monopolies who came really close to reconstituting the original monopoly but are now allowing the infrastructure to rot as they chase greener wireless pastures and regulatory-free backbone networks. Even those that swoop in to "save" the last mile copper are only interested in milking it until the cow dies and investors are stuck with a lifeless corpse.

If the FCC wants competition, they need to foster the development of muni fiber projects. Of course this isn't fair to existing corporations that would then have to compete with publicly funded alternatives.

Another potential option is to get busy figuring out how to free and auction a lot of new spectrum with rules around how much any one provider can control. (Otherwise the incumbents will just hoard it to protect themselves.)

tschmidt
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said by FFH:

So, how should the FCC FORCE landline competition and/or set maximum price levels?

For plain old telephone service (POTS) is is pretty simple it is called unbundled network elements (UNE)

I am a DSL customer and last December switched from the incumbent to a Competitive local exchange carrier (CLEC) for POTS and DSL. CLECs rent unbundled copper subscriber loop (just the wire) from the incumbent and rent space in Central Office to locate equipment. All the active electronics is their responsibility as is back-haul out of the various Central Offices. In my case worked out well; more phone features, higher DSL speed and lower cost to boot.

But to your larger question unless first-mile access networks are designed from the get go as a wholesale network it really is not feasible to share the facilities amount competitors.

That would be my preferred solution have a regulated wholesale first-mile fiber network that any ISP is able to rent capacity and hook up customers.

/tom
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1
said by FFH:

So, how should the FCC FORCE landline competition and/or set maximum price levels?

Let's assume, for arguments sake, the FCC should make it a priority to increase competition to the home for landline broadband connections. How will they go about this?

Do they have the authority to set prices without changes in the laws that set out their regulatory powers? Do they have the power to levy fees in order to subsidize the entry of competitors? Should they subsidize local municipal controlled competitors? Should the US nationalize Comcast, TWC, Verizon, AT&T, Google ownership of infrastructure, and make all broadband infrastructure a government run enterprise with the ISPs leasing access to the lines?

There are a lot of possibilities, but most of them are illegal and would constitute a governmental taking of private property.

So what is your preferred solutions out of all the possibilities?

It's a provision in the '96 Telecom Act. And who is going to answer someone as testy as you?

batterup
I Can Not Tell A Lie.
Premium
join:2003-02-06
Netcong, NJ
said by FFH:

So what is your preferred solutions out of all the possibilities?

One System, it worked; not to mention, "It's little, it's lovely and it lights".


anondownload

@comcast.net

too many on broadband already

i have to say that in the last few years i have changed my view concerning the benefits of broadband adaptation. for years i thought everyone would benefit from more easily available internet access.

but what i have seen is that the people new to the internet over the last few years use it almost strictly as an venue for entertainment and completing commercial transactions. the result is a far less intellectually stimulating internet, not my opinion of 'progress.'
axus

join:2001-06-18
Washington, DC

Re: too many on broadband already

Online shopping (with pictures, long reviews, etc) is a huge benefit of broadband. If all you could do online was financial transactions, that would be enough reason to promote the spread of broadband.

rit56

join:2000-12-01
New York, NY

How?

They regulate it with clear rules and guidelines that corporations have to adhere to. It's time to end the charade. The internet is a public utility and is rapidly moving to the "public" air waves that we the people own.
silbaco
Premium
join:2009-08-03
USA

1 recommendation

Re: How?

The internet is not a public utility. It is owned and operated almost entirely by private companies and organizations.
Arty50
Premium
join:2003-10-04

Re: How?

Oh really...read this and get back to us:

»www.pbs.org/cringely/pulpit/2007···683.html

tshirt
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The broadcast/wireless end is highly regulated and you MAY have noticed those high-priced auctions for frequency space to use the public airwaves?
In no way does "the internet" merit utility status at this time, and contrary to popular fantasy "regulated utility" doesn't ever mean CHEAPER.

FFH
Premium
join:2002-03-03
Tavistock NJ
kudos:5

Re: How?

said by tshirt:

The broadcast/wireless end is highly regulated and you MAY have noticed those high-priced auctions for frequency space to use the public airwaves?
In no way does "the internet" merit utility status at this time, and contrary to popular fantasy "regulated utility" doesn't ever mean CHEAPER.

Ain't that the truth! Telco prices only came down when they were deregulated. Old Ma Bell was regulated to death and prices for a simple long distance phone call were out of sight. Regulation MIGHT force more widespread availability of landline broadband, but it will come at a HIGH price. it just means that those with the means to pay will subsidize those who don't.
--
"If you want to anger a conservative lie to him.
If you want to anger a liberal tell him the truth."

Karl Bode
News Guy
join:2000-03-02
kudos:39

Re: How?

Except he's saying something different from what you're saying, and what you're saying isn't true.
said by you :

Telco prices only came down when they were deregulated.

San Francisco Chronicle, January 18:

Since fall 2006 (when the company was heavily deregulated), AT&T's price for flat-rate landline phone service has leaped 115 percent, from $10.69 per month to $23, according to information from the commission. The monthly price for measured service, which charges a fixed rate for a limited number of calls, has soared 222 percent - from $5.70 to $18.35.

There's countless examples like this for voice and broadband. Deregulation doesn't magically lower prices. Especially deregulation for deregulation's sake. Time to put that generation old lie to bed because it needs a nap.
elray

join:2000-12-16
Santa Monica, CA
Reviews:
·Time Warner Cable
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1 edit

Re: How?

said by Karl Bode:

Except he's saying something different from what you're saying, and what you're saying isn't true.

said by you :

Telco prices only came down when they were deregulated.

San Francisco Chronicle, January 18:

Since fall 2006 (when the company was heavily deregulated), AT&T's price for flat-rate landline phone service has leaped 115 percent, from $10.69 per month to $23, according to information from the commission. The monthly price for measured service, which charges a fixed rate for a limited number of calls, has soared 222 percent - from $5.70 to $18.35.

There's countless examples like this for voice and broadband. Deregulation doesn't magically lower prices. Especially deregulation for deregulation's sake. Time to put that generation old lie to bed because it needs a nap.

Both the San Francisco Chronicle reporter and Karl conveniently neglect to mention that not only were California's basic phone rates way below the national average, Pacific Telephone/SBC/AT&T and GTE/Verizon had not seen a basic rate increase under regulation for over 12 years, since 1994.

Regulation can be appropriate in some settings, but it doesn't assure lower prices either.
At the same time residential customers were paying $5.70/month for dialtone, they were paying up to $.39/minute for intra-LATA toll calls - $300/month phone bills for "local" calls were a regular "teachable moment" for parents of chatty teen girls, who had to rack up a lot of baby-sitting hours to pay off the tab.
tmc8080

join:2004-04-24
Brooklyn, NY
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Don't forget history so quickly! Telco prices (for then VOICE service) came down because one big MA Bell was broken up into regional bells (RBOCs) Then, like that liquid metal terminator the pieces came back together and there are now but three from 6-7 rbocs. More than a dozen cable companies now joined the party and since consolidated to a bit under a dozen since 1999.

There are plenty of reasons why competition fell into dysfunction but not many of them are the consumer's fault. There is a "kit gloves" policy when it comes to doing anything to impede cable or Telco decisions on deployment, pricing and terms of service. For at least a decade from 2000 to 2010 we've seen many municipalities begin to change their minds on having new competition because incumbent companies have not been upgrading their infrastructure and much lobbying to keep competitors from building at the same time (in essence to have it both ways.. not build and keep anybody else from building is a government sanctioned racketeering scheme). The FCC has very little authority to tell companies to build, but the DOJ and other federal & state agencies DO have the authority to act or not -- in the public's best interests.

It is at least a hope, that as these older corrupt generations pass on, the newer ones will be less corrupt, and real progress can be made. Incumbents will have to take a dump (upgrade) or get off the pot and lose their incumbency as monopoly or duopoly franchise.
rradina

join:2000-08-08
Chesterfield, MO

Re: How?

Corrupt older generations? Absolute power corrupts absolutely. No generation is immune to the allure of money perfume.

The great George Washington was one in a billion (and there probably weren't even a billion people on the planet back then). Even he turned it down not because he was beyond corruption but because he was wise enough to know that it would corrupt him.
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1
said by tshirt:

In no way does "the internet" merit utility status at this time, and contrary to popular fantasy "regulated utility" doesn't ever mean CHEAPER.

This is merely your personal uninformed opinion. And using "ever" or "never" tends to indicate a lack of open mindedness.

Nightfall
My Goal Is To Deny Yours
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Grand Rapids, MI
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There certainly are some issues

For as many issues as there are when it comes to adoption or competition when it comes to broadband, there are people who don't see broadband as a necessity. Heck, I am in the same boat as everyone else here. I would get rid of many luxury purchases before I would dump my broadband. There are some people who just don't see things the way we do.

Broadband penetration and competition are both big problems. Especially since most companies are not going to pay for an expensive cable run only to take a loss on it so that they can provide service to 2-3 people in a rural area. My grandmother was in the same boat years ago when Charter wouldn't run cable to her house without her paying $10k on top of the monthly fee. Then you have the lack of competition problem which everyone knows about.

Yes, there are problems, but the article does a poor job at focusing on them. They would rather talk to people paying through the nose for wireless data and saying that broadband is too expensive or not worth it. Would these people be customers anyway?
--
My domain - Nightfall.net
iowaboy
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Last Mile Availability

Should say that the availability of access outside of city limits is non existent. If you can get access it is dialup speeds at best and if you can get access inside of city limits you may only have one provider and the lines and equipment is not being cared for so dialup speeds are all that is available.