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Summary:

Broadband competition has two entirely different meanings depending on where you reside – inside or outside of United States. For rest of the planet, competition means opening up the existing networks, forcing the incumbents to share the last mile resources with the upstarts, so to speak. […]

Broadband competition has two entirely different meanings depending on where you reside – inside or outside of United States.

For rest of the planet, competition means opening up the existing networks, forcing the incumbents to share the last mile resources with the upstarts, so to speak. In the US, it means creating a brand new network, something that has been a pet project of suddenly competition-happy FCC Chairman Kevin Martin.

Martin (version 2.0) has been pushing for the open networks in the 700 MHz band of wireless spectrum that is going to be available soon, once the television companies switch from analog broadcasts to digital broadcasts.

His attempts, twisted at best, are particularly grating because he helped create the duopoly that is pushing the Google Block (Verizon’s words, not mine) to lobby for open access on this new network. Not that the Google Block doesn’t have its own (and not consumer’s) vested interests behind their bid.

Many have forgotten that it was during Martin’s incumbent-accommodating tenure that line sharing or “international” style competition was sent the way of the dodo in the US. Many will point that the Telecom Act of 1996 was crap to begin with, and they would be right but it can’t distract from the fact that it was over-zealous regulators, lobbyists and dim-wits in Washington DC who mucked it up in the first place.

We had a mess then, and we have a mess now. Anyway if the competiton-enforcing policies were put in place to begin with, we wouldn’t be going through the current head-spins. It would have actually forced change, like it has in rest of the planet.

France, UK, Germany and several other countries have seen broadband progress (higher speeds, lower prices and increased adoption) mostly because of competition that forced the incumbents to get off their butt.

Instead of taking this more common sense approach, in the US, we have seen a strategy called the “politics of fear” being effectively used (with FCC doing nothing) to effectively choke the competition. (And no, this is not just telecom networks, but also cable networks.)

Instead we have a situation where a new network is going to be built (if the incumbents allow it), which in turn means billions of dollars spent on building a new infrastructure, and no one exactly clear about when the consumers are going to see the benefits.

But Chairman Martin has never cared about the people who sign his paycheck: The American People.

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  1. “In the US, it means creating a brand new network….”

    It reminds me of the oil situation…with billions of dollars invested in the current infrastructure…there is absolutely no motivation to change.

    The solution: Come up with a million and one reasons for not doing what is right…

  2. Slow down there, Om. Keep in mind that in a substantial portion of the “rest of the planet” the telecom infrastructure is owned, wholly or in part, by the respective national governments. France Telecom, for instance, is still two-thirds owned by the government. It is quite reasonable for competitive providers to demand access to state-owned assets.

    Here in the US, as a refresher, no telecom infrastructure is state-owned and we busted up the only telecom monopoly we had almost a quarter century ago. In this environment it is completely unreasonable for competitive providers to demand access to privately-held assets. This is why the bone-headed 1996 TRA was finally buried. After all, if the TRA was a good idea then why not expand it? Allow Kmart to use Wal-Mart’s shelf space. Or American Airlines to sell seats on Southwest. Or Microsoft to sell Zune music on iTunes. Or Yahoo to get paid for ads on Google.

    Also, you use the word “duopoloy” pejoratively. As if it’s just a short step away from a monopoly and involves price fixing and other anti-competitive behavior. I live in an area covered by Cox Communications and AT&T and competition is alive and well. They’re constantly offering me more for less. If another provider wants my business they can do what the others have done—build a network.

  3. Why isn’t Verizon Wireless Screaming?? Because it looks like they will have access to some 38Mhz of this not really “…Open Access” spectrum Mr Martin is proposing.
    In short all that appears to be Open will be the 22Mhz in the Lower part of the(Congested)700Mhz Spectrum.
    Another question, where will the Public Safety spectrum come from? I bet it will have to come out of the lower band 22Mhz and not the Upper Bands 38Mhz the big carriers want.
    What will Google do here?? They could very well win a national license for a few Billion.
    If they want to own a piece of the Last Mile (only part they are missing in their quest for dominance in Broadband Deliver Networks) they need to bid on and win a slice of the nationwide Upper Band. The Lower Band space will be to congested to be effective for real Broadband 2 way communications.

    Jacomo

  4. Fact is that “duopoly” is fast becoming the norm around the world. It’s hard to find country with more that 20 mm population that still has a viable third wireline player (profitable with more than 10% market share). There are a lot of niche players that do apartment buildings or expensive neighborhoods in a few regions, but honest to goodness national 3rd pipe competitors are becoming like unicorn sightings.

  5. Astroturfer’s Anonymous Thursday, July 12, 2007

    It’s true: the TRA ended up forcing consolidation among telecom companies rather than fostering competition. However, you seem to refer to government owned telecom pejoratively. Take a look at South Korea, where the government stepped in to maintain internet infrastructure. They treat it as a public good, like a highway or public park. Increasingly, the internet is becoming a public good, so why not treat it as such?

    No, instead we have incumbent infrastructure monopolists, in certain areas overlapping, creating duopolies. The problem with duopolies is that neither company has much incentive to compete. It is much easier to maintain prices and strive to increase margins in a duopoly.

  6. Kevin Walsh, get your facts straight.

    France Telecom is not owned by the French Government. They only have a 32.45% stake, not the two-thirds that you stated.

    http://www.itireports.com/now_francetelecom.htm

    Your Wall Mart/K-Mart analogy is stupid. There’s no bottleneck in retail storefronts. There is a bottle neck in communications networks, and it is an industry with enourmous economies of scope and scale. “Building a network” as you propose is an economically inefficient allocation of resources (i.e. this industry exhibits natural monopoly/oligopoly traits).

    Open Acces works precisely because of these features.

    Cox and AT&T may appear to be competing, but they don’t compete head-to-head on the Internet product, instead focusing on service bundles. There’s an old antitrust saying, “Four is few, six is many”. The bottom line is the U.S. broadband market is slumbering because of anticompetitive behavior by telco and cable incumbents.

  7. Jay Srinivasan Thursday, July 12, 2007

    FCC displaying acts of bureaucracy? Say it isn’t so…by no means am I an expert in this area but your points speak to the notion that wireless, telecom, etc. are better managed overseas. I always marvel at the phones available in UK and Asia and wonder why the US is never on the same page when it comes to things like this. We don’t have to pioneer everything.

  8. bertrand ribeiro Thursday, July 12, 2007

    you wanna learn what the true meaning of uncompetitive is? Try looking north. In Canada we have two, that’s right TWO companies who control broadband (one has 100% of the cable network, the other has the entire DSL network). Oh, and by the way they also control cable tv, phone service, as well as the entire cellular network. How’s that for uncompetitive?

    btw, that’s the same reason our equivalent of the iPhone data plan costs 299/mt and has an unlimited bandwidth of 500mb/month… and your unused minutes… don’t carry over.

  9. Jesse Kopelman Thursday, July 12, 2007

    The problem, and it goes fr beyond telecom, is that their is no common sense lobby and even if there were it wouldn’t have any money. Meanwhile, there have historically always been plenty of people willing to spend money to convince you to go against common sense. As long as we allow money from lobbyist to be part of our political process, policy making will always remain divorced from common sense.

  10. Re: Kevin Walsh’s Kmart/Walmart analogy.

    The anology also doesn’t fit because the stores that contain those shelves were not build with taxpayer-paid subsidies, like the telco networks were.

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