Wednesday, January 13, 2016

450 internet access market failures and counting

What you see below is the community broadband map from Community Broadband Networks. On this map, more than 450 communities are identified as community broadband cities. Every one of these cities has taken the rash step of building their own networks because large incumbent ISPs refused to invest in modern technology in their cities. In each of these towns, the market has failed to provide the modern high speed access required to compete nationally and internationally until the government stepped in. Here is the map:

Each dot on this map represents an area where despite "the free market" or "private enterprise", the market did not respond to consumer demand. So the people turned to the government for help. And not only did they get the help they needed from the cities that heard the call, they got world class service and support from a government, public-private partnership or quasi-government entity providing internet access.

In the vast majority of these cities, community broadband outperforms the incumbent competition by nearly every metric of cost, speed and reliability. So I view it with a sense of irony when these incumbent ISPs then turn to the state government to seek protection and relief from government competition. Considering all the hyperbole from the cable and telcos, shouldn't we see something like this?

Yeah, I thought so, too. But that's not what we're seeing. When community broadband whups ass on the large incumbent ISPs, instead of offering better service, higher speeds at a lower cost, they run to the statehouse for more protection. Don't believe me? Read this:

Pssst ... Wanna Buy a Law?

Therein, you will see the sprawling network of ALEC, the American Legislative Exchange Council, writing, shaping and driving national public policy, one state at a time. ALEC wrote the model bill that was first signed into law in the state of Utah and then more than 20 other states over the next 14 years. ALEC has a library of more than 800 model laws, all shaped and written for the express purpose of sidelining what the people want by inserting what a small minority of very powerful people want.

In this particular case, competition in the internet access market is a big no-no as a mater of public policy and that public policy is financed by the biggest ISPs: Comcast, Time-Warner Cable, Cox Communications, ATT, Verizon, Centurylink (Oh, god. Centurylink!), Charter Communications, etc.What do they spend their money on? Shindigs organized by ALEC, the finest hospitality money can buy for your statehouse legislator, and of course, an open tab at the bar downstairs.

With regard to ALEC it is simply astounding that they have had such a vast influence on public policy. 200 times a year, their model bills are introduced into government, often becoming law. They are building a huge body of jurisprudence, conservative leaning law that does not play well for everyone else. These laws go to court and the courts add additional layers of protection for conservative idealism, and yet most of the model bills a written in secret. I also find a certain sense of irony that the major media isn't talking more about them given their broad influence. Where is the liberal media bias?

Yet another bit of irony can be found in the fact that incumbent ISPs started out by signing franchise agreements with the very cities they purport to serve, carving out a de facto monopoly that has served them well for decades. Now that community broadband is on the rise, they appear to be upset that their government supported business model is being disrupted. Adding to that irony is the fact that most of the community broadband networks are in decidedly conservative jurisdictions.

Over the last few decades, we have sent billions in subsidies to the incumbent ISPs, hoping that someday, they will roll out fiber, but they never did. New York is starting to ask for action or their money back in a very big, very public way. They claim that despite lavish subsidies for Verizon, FIOS didn't get built like Verizon promised. And New York isn't the only state asking questions.

So if you're stuck in a neighborhood with only one access provider, and your best hope is a 5mbs connection, you're seeing a market failure, in the flesh. You're noticing that there is no competition because entrenched interests want it that way. You might even consider taking up the cause of community broadband.

While private enterprise can do many things right and better than government, they tend to fail when it comes to utility service like internet access, for few are immune to the corrupting call of monopoly power.
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