TELECOM Digest OnLine - Sorted: Re: Broadband Competition Must Surely be Working

Re: Broadband Competition Must Surely be Working

John Levine (johnl@iecc.com)
25 Aug 2005 14:20:44 -0000

>> My DSL circuit is carried on a wire-pair that is nearly 50 years old,

> That's nice. But a lot of old loop plant was replaced, in whole or in
> part.

I think you will be surprised to find out how little "a lot" is in

>> There *IS* a third alternative. Separate the 'content' from the
>> 'delivery infrastructure'.

> That brings back regulation. We broke up the Bell System to get away
> from regulation and to go to competition.

My, how soon we forget. The Bell breakup was about long distance
competition, and LD has indeed been quite competitive, at least until
all of the LD carriers merge into one in a couple of years. But the
breakup made no difference at all to local competition. Your local
Bell company was and is just as much of a monopoly after the breakup
as before.

> So, if a telecom provider wants to bundle services, why shouldn't it?

Because the telecom provider is a monopoly, or now maybe a duopoly.
The only companies with wires into everyone's house are the phone
company and the cable company, and that is as true now as it was 20
years ago. The first mover advantage is insurmountable, and although
it would be legal for someone to raise $100 billion and overbuild a
new phone infrastructure alongside the one we have, it'll never
happen. (If it were at all possible, it would have happened during
the dot.com bubble when capital was free.) Verizon bundling DSL
service is like your state telling you that you can only drive cars
they sell you on their roads, and you are free to buy any other car
you want if you build the roads to drive it on.

The point of splitting the telco into switchco and loopco is that the
loop part is a natural monopoly and the switchco isn't. So split them
up, require the loopco to provide service to everyone on an equal
basis, and then completely deregulate the switchco. That would work,
and we'd end up with a much more vibrant market.

> Otherwise we're back to the Bell System and we must wait for the
> government to tell us what we may and may not have.

Uh, no. Please, put down the kool-aid and think about what's really
going on.

R's,

John

PS:

> As an example, the Bell System proposed its first cellular (called
> AMPS then) test system many years ago. It took the FCC over a YEAR to
> grant permission.

Considering all the new radio spectrum they wanted, a year was pretty
quick.

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