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Hey Julius: 100 Mbps To 100 Million Is Easy
Fixing the broken duopoly for the majority of Americans is not...
by Karl Bode 10:07AM Friday Mar 05 2010
Updated, reworded, clarified houses vs homes in two instances: As we noted yesterday, the FCC has started their sales pitch for the national broadband plan, which is scheduled to be unveiled in twelve days. Given the plan doesn't appear to do much about competition for fear of upsetting the nation's biggest carriers, the sales pitch so far has consisted of focusing on more murky concepts like "digital literacy," or the need to spend taxpayer dollars to advertise cable service. Less talked about is the failure of our duopoly markets, and why specifically they're failing.

Instead of focusing on 100 Mbps, the FCC should be focusing on competition and the huge swaths of American markets served by two or fewer carriers; carriers who keep prices high and lag on network investment because they have no competitive incentive to do otherwise.
Genachowski has had a tendency to be murky in public interviews, saying all the right things -- but usually not saying much of anything specifically. In an interview with Steven Levy at Wired, Genachowski offers one of the more cogent interviews we've seen. In it, he defends his recent declaration that the plan will boldly aim at delivering 100 Mbps service to 100 million households (with, you'll note, no hard deadline):
Anyone who tells you it's easy is mistaken. The first thing we need is a plan that sets goals and that identifies the key levers to make progress on deployment and adoption, which will be out March 17.
Getting 100 Mbps to a huge swath of Americans will actually be rather easy (whether you're talking 100 million homes, or 100 million users). We're not mistaken. According to the cable industry's own data, cable service now passes 125 million American homes. Installer sweat aside, DOCSIS 3.0 service, capable of 100 Mbps, would be relatively easy and inexpensive to deploy to almost all of those users within five years. DOCSIS 3.0 upgrades already reach more than 52 million of the 120 million current cable customers in the United States.

This is before adding in municipal fiber or Verizon FiOS (which will likely deliver 100 Mbps service in a year or two). This is happening now, slowly, without the FCC lifting a finger. Setting a goal the FCC knows could be attained without them actually doing very much is clever, but it doesn't really solve core industry problems.

The problem will be that while these networks may be capable of delivering 100 Mbps to users, many carriers aren't going to actually offer it unless there's competition. Those who do offer it will charge an arm and a leg for it -- again because there's limited competition to drive pricing down. Genachowski wants this 100 Mbps service to be "affordable" but again, he's not implementing any policies that are going to spur the competition necessary to make that happen.

Getting 100 Mbps to most people should be easy. What will be hard is getting telcos who milk aging copper to upgrade to fiber without competition spurring them to do so. What will be hard is finding a solution to the ridiculous influence companies like AT&T, Verizon and Comcast wield over our lawmakers on both the federal and state levels. What will be hard is creating competition. So instead of focusing on 100 Mbps, the FCC should be focusing on competition and the huge swaths of American markets served by two or fewer carriers; carriers who keep prices high and lag on network investment because they have no competitive incentive to do otherwise.

The FCC's own study found that open access policies are one possible solution, but the agency has clearly indicated they're not willing to upset the biggest carriers by pursuing it. Genachowski's latest interview does manage to touch on competition, and one of our more favorite topics: getting carriers to be transparent with their billing. As we noted on Wednesday, the FCC appears poised to require that carriers advertise their average speed and do a better job informing consumers as to what kind of connection they're buying. We're hoping the FCC's transparency efforts go even further. Strangely however, Genochowski seems to think transparency is going to somehow help address a lack of competition:
Healthy competition places discipline on the market and should focus providers on providing the best service at a lower cost. Consumers are confused about their service and the price. They're confused about what speeds they're actually getting, they're confused about what they're paying for. As part of a competition strategy, increasing the transparency to consumers empowers consumers to make the market work.
Except we have an aching suspicion that if the FCC isn't willing to stand up to carriers by supporting things like open access or tough network neutrality laws, they're not really going to have the courage to touch on transparent billing issues like the use of below the line faux taxes and fees to jack up the advertised price after sale. And while an educated user buying clearly-defined product is a great thing -- clarity in pricing isn't going to help them all that much if they have the choice of just one carrier -- or two carriers quietly working together to keep regional prices high.

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