Friday, July 25, 2014

Thou dost protest too much, Comcast, Time-warner and Verizon

Consider for a moment, the enormous market power of the top internet service providers, Comcast, Time-Warner, Verizon and AT&T. Each of them are very profitable private concerns with huge market share. Each of them also commands a monopoly in their respective service areas. Each of them has tremendous lobbying power in Congress and in state legislatures. All of them are cognizant of one very big threat to their businesses: community broadband.

They are working hard to convince the Congress and the legislatures that they shouldn't have to compete with community broadband (aka, municipal broadband). They contend that private enterprise will always outperform government. Private enterprise will always provide better customer service, uptime and speeds when it comes to broadband.

But what they don't tell us is that community broadband, now available in more than 400 cities nationwide, provides 10 to 100 times the speeds offered by the incumbent providers for about the same price or less. If private enterprise is so great, why is this happening?

This is because each of the incumbents (Comcast, Time-Warner, Verizon and AT&T) have been entrusted with a monopoly franchise to operate in local jurisdictions they serve. In any city, there can only be one phone company, and/or one cable company. You can't have more than one, that just isn't practical.

So what did they do with that public trust? When Congress opened their wallet in the 1990s to provide hundreds of millions in subsidies and grants specifically for the purpose of network upgrades the incumbents laid off employees and gave bonuses. Network upgrades? Are you kidding? This is free money!

The result of this sleight of hand is that when communities wanted faster service, they could not get it from their monopoly service providers. After years of pleading with incumbents, many small towns and cities gave up and figured out ways to create their own networks, just like Chattanooga and Wilson, North Carolina.

Blindsided by this trend, the incumbents went to the state legislatures to pin down and limit community networks so that they could not expand beyond their original footprint. The message is, you will take what we have to offer, no questions, no complaints. We'll give you higher speeds just as soon as we can figure out how to finance that house on the coast of Spain for our CEO first.

Now two of the biggest community broadband cities, Chattanooga and Wilson, are petitioning the FCC to remove barriers imposed by state legislatures that prevent them from expanding their service. These community services are not only providing faster service, they are making money doing it, and doing it well. This pays dividends for their respective jurisdictions in the form of money that can be used for expansion, upgrades, and customer service. I know, pretty novel concept, huh?

Christopher Mitchell of Community Broadband Networks, notes with interest, that the courts have recently ruled that pre-empting state laws that preclude local choice in broadband providers is well within the authority of the FCC. Let's hope that Congress gets a hint that the Blackburn Amendment isn't going to pass and if you voted for it, you're going to feel the heat in the mid-terms.

In the end, we wouldn't be having this discussion if the incumbents respected the public trust of their respective franchises and honored the people who gave them the franchise in the first place. If the incumbents are replaced by community broadband, you will know why it happened.
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