Tuesday, May 13, 2014

What is all this business about common carriers?

Cable and telephone companies would have us believe that there is a vibrant and competitive market for internet access. They would like us to believe that they are innovators and that if given the room and the time to do so, they will build a better network for us, their customers.

First, lets look at the innovation that cable and telcos want us to believe they have provided. The incumbent providers want us to believe that they're innovators, that they did this or that first. How long have you been waiting for fiber to your home? If you think fiber is new, guess again. We've been waiting since at least 1996 for the telcos to build out fiber to the home. The incumbent carriers were granted enormous subsidies to the tune of $200 billion to get this built out.

What did they do with all that money? Why, they granted bonuses and C-level salary increases so they could run off with the money instead of building out the network as they promised they would do. Prices went up, service went south relative to the rest of the civilized world.

Comes now Google, with Google Fiber. First in Oklahoma City, then in Austin, Texas with more to follow in places like Provo and Salt Lake City. In those same cities, incumbent carriers dropped prices and increased speeds. They were very upset to see real, meaningful competition, but you won't hear that from Time magazine or any major media outlet.

How innovative is that? Google is just the tip of the iceberg. Communities fed up with waiting for the incumbents to build out fiber have taken matters into their own hands to build their own networks with fiber to the home, business, schools and libraries. Many communities have either built or plan to build community broadband as a utility.

Community broadband is seen as a viable threat to the incumbent cash flow. Incumbent carriers mobilized their forces in the state legislatures to make it much, much harder for cities and small towns to light up their own fiber networks. Why? The incumbents don't like competition.

Incumbent carriers didn't just work with legislation. They sued in court to prevent communities from building their own networks with tax dollars to compete against private carriers.

So, how did the incumbents get here, you know, with their monopolies? I say monopolies and mean it because at my address, in my neighborhood, I can get 50mbs and above with Comcast. With Centurylink, I can't get squat. Well, I can get 5mbs, but only 80% of that is guaranteed. It's like Centurylink surrendered the territory to Comcast. Maybe they have some kind of deal going on. But both of them sued Utopia to stop a community broadband network from being built out.

Yeah, that's innovation, right?

The incumbents want their franchise monopolies without competition from other carriers public or private. This way, they can keep the C-level suits happy in their second homes on the coast of Spain.

Oh, yes. They don't want to be reclassified as a common carrier, either. That means regulation. But they seem to forget what the Supreme Court said in a famous case back in 1877:
"Whenever any person pursues a public calling, and sustains such relations to the public that the people must of necessity deal with him, and are under a moral duress to submit to his terms if he is unrestrained by law, then, in order to prevent extortion and an abuse of his position, the price he may charge for his services may be regulated by law." -- Munn v. Illinois (1876)
The incumbents are engaged in a public calling. They mix data together from whatever source and deliver the data to their customers. They have a franchise or some other legal device which allows them to operate without competition from others because, let me tell you, laying cable of any kind is really expensive and it's hard to do it again for another provider.

The incumbents certainly act like common carriers, but they don't want that designation because that would open their network to competitors. That would force them to sell access to their network at wholesale to other people. You know, like ISPs. That's the deepest fear of the incumbents, the potential for competition like we've not see in more than 20 years.

If there were real competition, we wouldn't be having this discussion about net neutrality at all. With scores or even hundreds of competing ISPs vying for our business, they would all try to offer the best speeds at the best prices. But that's not what we're getting from the incumbent carriers. Netflix wouldn't be signing deals with anyone except their own customers.

No, what we're getting is screwed. Screwed by the last mile carriers and the sycophants who regulate them while pining away for a cushy job with lofty pay, working for the people they regulate.

This why the incumbent carriers need to be reclassified as common carriers. There is no competition at the last mile.
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