When incumbent providers cannot serve the broadband needs of some localities, local governments should be allowed--no, encouraged--to step up to the plate and ensure that their citizens are not left on the wrong side of the great divide. So it is regrettable that some states are considering, and even passing, legislation that could hinder local solutions to bring the benefits of broadband to their communities. It's exactly the wrong way to go.
The Looming Cable Monopoly
Susan Crawford has coined the expression "looming cable monopoly" to describe important changes in the Internet access arena. We have long discussed the ways in which FTTH represents a natural monopoly -- the first entity to build a FTTH network is likely to be the only one. What we haven't discussed how cable networks are similarly edging DSL-dependent telcos out of the market.
The short version is this: upgrading cable networks to offer fastest speeds is much less expensive than upgrading DSL networks. Something not often mentioned: aside from AT&T and Verizon (who effectively mint dollars with their mobile revenues), the telephone companies have no money to upgrade their DSL networks anyway.
When the FCC took a look at this situation, they concluded that what little competition we have for broadband in the US is about to decrease (something we have long argued is a result of relying solely on the private sector for essential infrastructure). From the National Broadband Plan [pdf] on page 42:
Prior to cable’s DOCSIS 3.0 upgrade, more than 80% of the population could choose from two reasonably similar products (DSL and cable). Once the current round of upgrades is complete, consumers interested in only today’s typical peak speeds can, in principle, have the same choices available as they do today. Around 15% of the population will be able to choose from two providers for very high peak speeds (providers with FTTP and DOCSIS 3.0 infrastructure). However, providers offering fiber-to-the-node and then DSL from the node to the premises (FTTN), while potentially much faster than traditional DSL, may not be able to match the peak speeds offered by FTTP and DOCSIS 3.0.
Thus, in areas that include 75% of the population, consumers will likely have only one service provider (cable companies with DOCSIS 3.0-enabled infrastructure) that can offer very high peak download speeds.
To be clear - those "very high peak download speeds" they are discussing today are tomorrow's "normal" speeds. For most Americans, the only way they will have a choice in broadband providers is if they settle for the future equivalent of dial-up connections. This reality is either terrible news, or signs of "robust competition" if your body is on the FCC and your head is stuck in the sand.
FCC Commissioner McDowell [pdf] in his stirring attack on the FCC's modest network neutrality approach:
Nothing is broken in the Internet access market that needs fixing
All levels of the Internet supply chain are thriving due to robust competition and low
market entry barriers.
Terrific. And just for the record, McDowell was on the FCC when they released this plan outlining the demise of what little competition exists and no plan to take action to rectify the situation.
Anyone who thinks wireless will change this situation needs to go back 8 years and read the years of hype around Wi-Max and how it would change everything. Of course, it now offers speeds slower and less reliable than DSL while matching DSL price. The same hype now surrounds LTE. Though the FCC engages in some wishful hoping regarding the possible future of wireless, it notes (page 41):
Wireless broadband may not be an effective substitute in the foreseeable future for consumers seeking high-speed connections at prices competitive with wireline offers.
So what if cable is only technology that will offer fast broadband to most Americans in the future? It isn't like these cable companies have a gentleman's agreement not to compete with each other, right? Actually, it is a lot like that, writes Susan Crawford:
The operators clustered all cable into regional monopolies during the summer of 1997—Leo Hindery, then-President of Tele-Communications, Inc., and the architect of the effort, calls that summer the “Summer of Love”—pursuing swaps and partnerships that put every market in the United States except four in the hands of a single operator. Clustering continued when bankrupt Adelphia Communication’s assets were divided between Comcast and Time Warner Cable in 2006. In general, non-competing cable systems have at least 70% of the potential video customers in most of the largest metropolitan areas in the U.S.
Once again, remember that FCC Commissioner McDowell interprets this as a sign of "robust competition."
Enter the need for Network Neutrality:
Once the cable digital migration is accomplished, the cable companies’ big pipes will be filled with virtual, highly-compressed digital “channels.” Three of those, or so, may be devoted to Internet access. The real growth area for cable is “broadband,” but very little of “broadband” will be recognizable as Internet access. The rest of the transmissions filling the pipe will use the Internet Protocol but will be thoroughly managed, monetized, prioritized, filtered, packaged, and non-executable—much like traditional cable television today. When a monopoly cable provider can allocate just two or three of its hundreds of virtual “channels” to Internet connectivity, and when only that provider can sell you video-strength speeds, net neutrality becomes a subsidiary issue—a tiny white bird landing on the back of an enormous hippo. Net neutrality matters, but it is a sideshow. As one content executive told me, “Comcast owns the Internet.”
Comcast's dispute with Level 3 was another sign that Comcast has a plan to turn access to the Internet into a service more akin to cable television -- do you pay the extra $10/month for uninterrupted access to Netflix? Or do you use the Comcast product that comes for free with the broadband connection?
Again, Crawford asks the right questions:
When there is only one provider in each locality making available the central communications infrastructure of our time, what should the role of government be with respect to that infrastructure? When broadcast, voice, cable, and even newspapers are just indistinguishable bits flowing over a single, monopoly-provided fat pipe to the home, how should public goals of affordability, ubiquity, access to emergency services, and nondiscrimination be served? And what happens to diversity, localism, and the civic function of journalism?
This is where we step in to remind readers why we exist: to help communities avoid this future. Communities can build their own networks -- a community fiber network is technologically superior to cable architecture and more than capable of offering effective competition even with all the advantages that come with cable incumbency.
But the longer communities wait to make smart investments, the more difficult it may be to succeed.