Tuesday, February 16, 2016

Merger mania makes the case for community broadband

You might remember the attempted Comcast/Time-Warner cable merger of last year. Intense public and government pressure eventually forced the two companies to abort the merger. As the merger went through the review process, it became clear that Comcast and TWC together, would be a media behemoth, far too big for the regulators to regulate much less understand. The public became aware that such a merger would leave us with fewer choices, higher prices and the same service or worse.

But there is another merger on the horizon: Charter Communications, Brighthouse Networks and Time-Warner Cable. Former FCC chairman Michael Kopps, has an op-ed piece at Moyers and Company that sheds some light on this deal. It's the deal that no one in Washington is talking about. I guess no one is talking about it because there is a fervent hope that we could have two Comcasts instead of one.

The merger-mania is a reflection of the absurd desire on the part of the board of directors in all of these companies for a private monopoly. Sure, they talk a good game about the free market, but the reality is, they have no desire for a free market.

Comcast is not only a cable company, they are a media company with ownership of NBC and Universal Studios. Time-Warner includes Warner Bros and numerous other content producers, cable networks and so on. Merge them with Charter and Brighthouse, and then they're talking about owning 70% of the high speed internet market. A free market is not what they're after. A cornered market is much closer to the mark they seek.

Incumbent ISPs like TWC, Comcast, ATT and Verizon have huge financial incentives not to provide service. You'd think that these companies would want to provide service to everyone they could reach. But they won't. Their business model is scarcity, not abundance.

In Tennessee, communities near Chattanooga are begging their legislature to repeal a law specifically designed to inhibit competition. Chattanooga is home to one of the fastest ISPs in the country, the Electric Power Board (EPB). EPB provides gigabit service to their residents for a cost of $70 a month. That's one gigabit up and down. While many of us have speeds like 20 or 50 Mb/s (that's megabits per second), the EPB is offering 1,000 Mb/s. They are leaps and bounds faster than most incumbent telecoms and much, much more affordable. The EPB is a shining example of what we call community broadband.

Yet, there are towns close to Chattanooga that don't have any internet access. Many of them are using dial-up modems. So why aren't the telecoms bringing them better service? There is no incentive for them to do it. And the state laws in Tennessee prevent the EPB from expanding service to the neighboring cities as well as prevent those communities from building their own. Despite appeals from those communities without EPB service, the legislature refuses to listen to them. That's because big money from the telecom giants says no, you can't have better service.

Just as an interesting side note, at the University College London, they are building the hardware for the future. They have simplified the design of the optical receiver, making it easier and cheaper to manufacture and to bring fiber to every home and business. They are planning for a future where the average home connection is about 5-10 Gb/s (that's gigabits per second). But if the mega-merger cable companies have their way, it won't be happening here. The cable companies top out at 300 Mb/s on their copper lines and they don't want to cut into executive salaries by rolling out fiber.

More than 450 cities and towns across the nation have adopted community broadband and all of them have profited handsomely. The dividends to each resident include high speeds with reliable service at a reasonable cost. But there is one other feature that hasn't been highlighted by any of the articles I've read on the subject. Community broadband can't be bought in a merger because it's more than an economic matter, it's a political one. Unless the community consents, it ain't gonna happen.

No matter who buys who, community broadband will still be there, serving their communities, listening to their subscribers and providing consistently better service than their private and national counterparts. If you're with Comcast, you know what I'm talking about. Just this week, Comcast had a major service interruption that affected millions of subscribers across the nation. You know how it is, monopoly loves misery.

The internet was built as a peer to peer network. It was initially designed to be a communications network that could survive a nuclear war and it routes around damage. The people who promote and profit from industry consolidation seem to forget that. They forget that if one entity owns a large swath of the network, more people are affected by an outage.

Community broadband networks are peer to peer. No one network has an advantage over another. They treat each other with respect and work together. They are not competing against each other. Unlike private ISPs they are not competing with their customers, either. They cannot be bought because they're owned by the people, and work for the people, not some distant and aloof CEO in the corner office of a New York high rise.

This latest merger gives us one more reason why we need to consider community broadband. Having a public option will keep the private options honest. The public option of community broadband guarantees internet access for all who are served by it where the private ISPs fail. Why? Because the interests of the community are at the heart of the business for community broadband.
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