I’m very happy to learn that the idiotic Snowe-Dorgan amendment to the telecom bill was defeated in committee. It was a close vote, but all Republicans except Snowe voted against and all Democrats voted with the Maine moron. There will undoubtedly be an attempt to re-introduce it as a floor amendment when the bill moves to the next stage, and we’ll hear the same tired old rhetoric about yesterday’s Internet seen the eyes of a bunch of Deadheads.
The Kosola Krowd is hoppin’ mad over losing once again, and I expect they’ll be on to a fresh round of vilifying Mike McCurry to demonstrate their deep understanding of the issues. Some are even hailing the loss as a victory.
Scott Cleland is happy:
“I am encouraged the Senate Commerce Committee rejected onerous net neutrality regulation of the Internet and also specifically protected Americans’ first amendment rights of free speech on the Internet,” Chairman Scott Cleland said today. “Those net neutrality proponents whose true agenda is to protect free speech on the Internet, and not price-regulate the Internet, should support Senator Stevens’ strong Internet First Amendment language on the Senate floor. Blocking final passage of the Stevens Bill would only ensure that net neutrality proponents achieve nothing in their quest for additional Internet safeguards,” Cleland added.
And he should be. The telecom bill has non-blocking rules, but not the flat service level Google wanted. That should be hailed as a victory all around.
And in related news, Sen. Ron Wyden (D, Google) is throwing a tantrum:
(Broadcasting & Cable) _ As the Senate prepares to take up video franchise/telecom reform in the Commerce Committee Tuesday, Senator Ron Wyden (R-Ore.) has threatened to put a hold on the bill if it is not strong enough on network neutrality.
Wyden’s been laughed off the Senate floor recently for his wild claim that Cox Cable blacklisted Craig’s List. I hear Senators are carrying copies of article debunking Wyden’s claim and sharing them. Google is building a massive complex right down I-84 from Portland, with the intent of cornering the market on Internet video downloads.
Wyden is just another politician protecting one of his state’s large employers from regulation.
UPDATE: Save the Internet, the astroturf lobbying front funded by Robert McChesney’s Free Press organization, publishes reactions from three consumer advocates disappointed that consumers might have some price flexibility in their Internet service plans. With advocates like these, who needs enemies?
I’ve lost basically any remaining respect I had with Wyden when he put out that asinine editorial. I figure he should know better, banning per fee QoS would basically wipe out one of the primary tools competitive tools CLECs could offer, and they employ more people in Oregon than Google ever will.
I really think he’s just got this utopian 1991 conception of Internet architecture stuck in his head that hasn’t kept up with the times.
If Comcast wants to offer VoIP and provide itself with enhanced QoS, but refuses to provide QoS to other VoIP providers, will I have to choose between AT&T and Comcast for wireline telephony service if I want to avoid dropped calls when the Internet gets busy? The FCC principles and the COPE Act might prevent blocking, but they do not require making QoS available to competitors.
The Markey amendment–the QoS but no QoS fees amendment–was designed to correct this market failure by allowing Comcast to provide QoS for its VoIP services, but only on the condition that it provides all VoIP providers with enhanced QoS without QoS fees. Richard has speculated–as I understand his argument–that such free QoS will spawn so many VoIP providers that they will overload the system or that the wireline owners will simply refuse to provide enhanced QoS–even for their own VoIP services.
If we assume that his speculation is right, does anyone have a solution for the lack of competition in the last mile? What alternatives are there?
Richard has suggested the antitrust laws, but I have my doubts about their effectiveness in the natural monopoly or duopoly market condition that we face. (Monopolies, in and of themselves, are legal. The antitrust laws, specifically Section 2 of the Sherman Act, prohibts only the maintenance or acquistion of monopoly power by wrongful conduct.)
As long as Comcast offers QoS to their customers as a stand-alone service, and to third parties wishing to connect to their customers with QoS, and all for a reasonable price, we’ve got no problem. Shaw Cable sells QoS for $10/mo and that strikes me as reasonable.
It’s in the interests of last mile providers to do this, so I don’t see why they wouldn’t. If they don’t, then amend the terms of the national franchise appropriately. This can happen if it needs to as long as advocates don’t cry wolf about nonsense hypotheticals.
You don’t have to have QoS for your service provider so long as Comcast doesn’t deliberately drop you from “best effort”. The quality won’t be as good, but this is how it’s always been. If Comcast offered VoIP (even without QoS), they will have an advantage because they’re closer to you. That’s the nature of the Internet; what ever is closer has lower latency and is less likely to have problems.
If Comcast wanted to bundle QoS with their own service, that just gives you more choice. That doesn’t stop Lingo, Vonage, Skype from doing business so long as they’re not deliberately blocked or degraded. Is that an advantage? Sure but it’s the nature of bundling. A lot of things are bundled in the free market. If Comcast offers bundled VoIP and QoS on top of their already low latency because they’re closer to you, good for them and good for us because we get more competitors in the phone market. At no time in history has phone service ever been so cheap.
Richard, the fact that Shaw offers QoS does not help me. Comcast serves my area. Am I supposed to move to get enhanced QoS VoIP? My choice is Comcast or AT&T or best effort VoIP, which is not so good during times of congestion. So are you saying that we should put in Computer Inquiry restrictions in Comcast’s national franchise now? Or once the COPE Act is passed? And do we need to amend the COPE Act to provide for that?
George, you seem to recognize the problem but suggest that Comcast’s advantage–providing QoS for its own VoIP but not for others–is okay, just the free market at work. But when there is no real competition–except for AT&T–we have the potential for a monopoly or (in my case) a duopoly characterized by what the antitrust people call coordinated interdependence, which means higher rates. Historically, we regulate in natural monopoly (or duopoly) situations like this until competition remedies the situation, which isn’t due until the wireless options become commercially relevant.
Are there other alternatives?
Chad, Comcast has never been in the phone market until recently. What would be the problem with them offering VoIP? Even if you banned selling QoS, any ISP has a native advantage by being less than 3 hops away. I remember paying $.55 a minute for calls to China in 2000. Now it’s like 5 cents a minute and you can get all-you-can-eat phone service to Asia for $35 from Lingo.
As a matter of fact, QoS is primarily on outbound traffic and you have very little control of it coming inbound. The biggest bottle neck is your own router before it even gets to your cable modem. If you simply implemented outbound priority on your own router, you’d be way ahead of the game and you would prevent your own traffic from killing VoIP. Having QoS on the Internet would be even nicer, but it’s only natural you’re going to have to pay for the service. Your ISP already has a huge built in advantage on offering lower hop/latency phone service (IP to Phone). For IP to IP phone service, then your ISP is only going to be able to prioritize it within their network and it’s the same beyond that.
George, you are right about prices right now, but things are likely to change as the Internet gets more congested and the demand for QoS increases for time-sensitive apps. And I believe you about the fewer hops with the Comcast phone service and one problem being my own traffic. And, in fact, I would expect to pay for QoS if offered by Comcast. But what I would like is for Comcast to compete with someone (in addition to AT&T) and not use the proceeds from the QoS fees to cross-subsidize its VoIP service so that other VoIP providers are at a pricing disadvantage. Because, without more competition, I am afriad that prices are going to go up and go up a lot in the next few years.
And my fear is not merely uninformed speculation but rather based on economic principles of supply (the limited amount of QoS) and demand (increasing for apps w/ QoS).
Chad, what do you think you’re going to accomplish if you outlaw the sale of VoIP? Do you not understand that if you make a stupid law that says if Joe buys enhanced QoS then Tom gets to have it too at no extra cost, QoS will never see the light of day? Is that what you really want? You pay for QoS, I don’t but I get to have QoS too? Your fears are based on speculation and the notion that Comcast adding competition to the phone companies isn’t good enough. You can’t micromanage competition to the point that unless we’re seeing 20 competitors, we’re not going to allow the sale of QoS. You can’t start passing crazy laws to demand more competition; the market will not react the way you want it to. There are no such laws against the sale of QoS now, but we have plenty of competition in the VoIP market. Why make some crazy laws?
Right now we’re seeing BitTorrent traffic drown out half the Internet. The Markey and Snowe proposals make it impossible to manage the threat from BitTorrent and the Netflix of the world wanting to transport DVDs over the Internet. QoS is a critical protection mechanism for the little guys (bandwidth wise) on the Internet. The kind of QoS that is normally sold on private WAN links is based on a quota system where you can only send so much priority data to your carrier. For example, only 10% of your data can be marked for maximum priority. The “end-to-end” and DPSProject folks want to make it impossible to inspect packets because somehow that’s supposed to be evil. They want either no priority mechanism or just prioritize all small packets. The problem with that is that they’re assuming small bandwidth applications send small packets, which is just stupid. BitTorrent will resort to anything to get more throughput and it will send small packets.
George, I never said that I would like to outlaw VoIP or make QoS unavailable. My concern is about competition in the last mile, and soon that lack of competition will impact independent VoIP providers. We are likely to see one and sometimes two competitors in any given market, and that is not enough. While the “no QoS fees” approach is a creative alternative to traditional regulation, you and Richard might be right about its practical feasibility. Do you have another suggestion about ensuring competition or should we punt on the issue and hope wireless and satellite get here soon enough (which is what the FCC did) before the independent VoIP providers get squeezed out?
Bandwidth prices have been dropping for years . Same with the cost of making a phone call.
Cable rates have been pretty stagnant due to a lack of competition for triple play services, but they’ve steadly enhanced services with improved transfer rates and network reliability. You are certainly not paying for “more of the same” as some NN propents suggest.
Once the Telcos can actually compete in the Triple play arena, you can definitely expect to see prices for such services fall as well.
Eventually, phone calls will be essentially free, but if you want PSTN like reliability, you’ll need to pay for things like QoS.
Max, bandwidth prices have been dropping in part because of competition in the market, which has been ensured through FCC regulation but is scheduled to end about mid-2007. (Falling prices might also be due to learning curve effects.) Once that regulatory regime ends, we can expect the competition it created (by guaranteeing independent ISPs access to wirelines at regulated rates) to end, as well. Fewer competitors means higher prices. Your historical evidence of declining pricing, therefore, is not an indication of what prices will be tomorrow.
From an economic perspective, the right policy is to ensure that there aren’t entry barriers that artificially protect incumbents. With respect to wireline access networks, the most significant entry barriers have to do with access to rights-of-way. With respect to wireless networks, they have to do with inefficient spectrum policies. We should focus on these entry barriers rather than “thumb-on-the-scale” approaches like mandated net neutrality.
More specifically, federal law should require non-discriminatory access to rights-of-way where localities may charge fees only to recover the actual costs associated with administration of the rights-of-way. On spectrum policy, the most important thing to accomplish is to make more spectrum available for both licensed and unlicensed uses.
D.L., thanks for providing an alternative to NN legislation. You seem to suggest that the key is to remove barriers to entry (specifically, getting access to rights-of-way) to encourage the deployment of wireless networks and possibly more wireline networks. One criticism of this approach that I have heard is that the wireline owners are buying up the spectrum so they might delay deployment and/or bundle it with their wireline services. As a result, the wireless options, although new platforms, might not provide new competition. And I have not heard about any third wireline provider. Thoughts?
The brightest prospect for a third wired network today are the power companies — broadband-over-powerline (BPL). Like the cable and telephone companies, they’re already in the rights-of-way, so they can’t really be excluded. Ideally, we would make it easier for entities that aren’t in the rights-of-way to get there. But that’s politically difficult because it would reduce the authority of local goverments (and in the long run, hit them in their wallets).
The wireless situation is quite complex. By far the biggest problem is the complete insanity of our overall spectrum policy. In a perfect world, we could start from scratch and divide spectrum into licensed and unlicensed bands. Then we could make it as easy as possible to sublease spectrum and use it for whatever purpose makes it most valuable.
But we probably can’t do that. So what we should do is eliminate all barriers to transferring spectrum licenses or using them for different purposes. This would make it more difficult for entities to hoard spectrum because they would have to face the opportunity cost of doing so. We should also consider more aggressively requiring divestment of spectrum by entities that don’t put it into productive use.
Finally, I would not completely discount satellite. Wild Blue offers service nation-wide. It is likely to be most successful in remote areas where the cost of deploying a wired network is prohibitively expensive.
I had forgetten about BPL. As you point out, getting a right-of-way shouldn’t be an issue because the network is already there. My understanding is that it’s a little ways off from viability. So if that’s the brightest wireline prospect, I think we need to look at wireless and satellite.
The wireless situation does seem complex, but removing transferrability restrictions seems like it would enable the telecoms and cable companies to hoard spectrum. It would allow them to buy it all up. Further, it seems likely that the opportunity cost of hoarding would be less than the costs of more competition from independent providers.
You say:
This sounds like more wireless regulation. I assume that the FCC would enforce this. How would this work? What if the wireline owners are simply slow in deployment and do not actually shelve the spectrum? How much time should they have?
Moreover, would it be enough? What if the wireline owners buy up all the spectrum and bundle wireless services with their wireline services? To increase competition, do we need to make sure that the wireline owners do not end up owning all the spectrum?
They’ve been dropping because of competition, not regulation. Backbone providers haven’t been regulated nearly to the same degree as baby bells or last mile access. Level 3 or Wiltel is not regulated nearly as much as Verizon or SBC, and the deregulated providers are usually cheaper.
In the Triple Play market, you only have one real game in town, and that’s cable. deregulation will give you other options, so I don’t see how you know have “fewer” competitors. 2 is still a larger number than 1.
In regards to plain vanilla wireline and Internet access, the deregulation is sure to kill off the remaining non facilities based CLECs (But suprise, they were all dying off anyway, even with all the advantages that were handed to them.), you still have plenty of service options from the ones who bothered to build their own networks.
For example, where I live, Qwest doesn’t offer DSL, or only 256k DSL (Too far from their CO.)
However, I get service from a local CLEC who uses better DSL technology, has lower oversubscription ratios, better CPE for about $10 – $15 bucks more than the incumbents service plan. even with the UNE-P changes, I won’t be effected, because the CLEC in question owns everything but the copper, but all they need is the local loop.
With this in mind, it’s worth noting that it’s disengenous to confuse Network Neutrality with unbundling wires, they are only tangentally related.
The legislation proposed so far explicity deals with has to do with traffic management at the Datalink or higher protocol/optical layers, not local loop access.
Max, you said this about prices:
The regulation gave independent ISPs a chance to compete, and they became the source of broadband competition. The ineffectiveness of some independent ISPs to compete (or the ineffectiveness of the regulation to allow them to compete, depending on whom you ask) does not mean that the there would have been competition absent regulation.
Triple Play is three services–voice, video, and data–and arguably three separate markets. The franchising reform–not the deregulation–will allow the telecoms to enter the video market to compete with cable. So the franchising reform will take us from 1 competitor (or 1.5 if you count satellite) to 2 in video. And that might be an improvement in video, but not in voice and Internet access if those markets shrink to 2 competitors. Regardless, can’t we do better than two competitors?
It’s nice for you that a CLEC in your area still provides some competition with Qwest, but what about all the other markets across the country?
Net neutrality legislation is related to the former regulations regarding unbundling and pricing. Those regulations created competition, and that competition prevented discriminatory tactics or price/margin squeezes that would favor the wireline owners in Internet content and applications. (For details, see the FCC’s Computer Inquiries rulings.) In a market with competition–here, regulation-induced competition–no net neutrality legislation is necessary. But now that we do not have that regulation, the issue about needing net neutrality legislation becomes debatable. In short, NN legislation is an alternative to unbundling/price regulations. Both are intended to prevent discriminatory tactics and price/margin squeezes by the wireline owners. (We can debate about their effectiveness in accomplishing that goal, but the intentions are clear.)
And I would rather you call me uninformed than disingenuous.
The FCC typically does impose build-out requirement on licensees. They could impose more agressive requirements. But as a federal agency they are susceptible to capture by industry, so this remedy might not work as well as could be hoped.
You certainly could prohibit certain entities from obtaining certain licenses. The government hates to do this because it reduces their revenue from auctions.
The regulation never had much to do with ISPs. It created CLECs, of which there are two types.
Facilities based
Non Facilities based.
The non facilities based carriers were basically given a free ride, and were unable to be profitable, even though they were leeching off ILECs. The facilities based carriers are doing ok. The basic lesson is that people who build networks usually have a better idea of how to run them, a lesson that shouldn’t be lost when discussing NN.
Are Produce, Meat, and Eggs three seperate markets? Or do we call them all groceries? I could argue that this is hair splitting, but being able to offer three services over the same infrastructure and getting all three on the *SAME BILL* is why Triple play offerings are so attractive. Triple play is the value proposition to the customer, who can still chose to do things ala carte. Most customers don’t want alacarte though, and are actively demanding triple play! That’s why people still sign up for Cable Voice, even if it isn’t as reliable as the PSTN.
Deregulation is necessary if you want anyone, especially phone companies, to roll something out to your house other than copper. Franchising doesn’t fix this part of the problem, it just lets them more quickly catch up with the Cable cos in terms of red tape.
Yes, it is possible to run video to you over ADSL2+, but you’d only get two set top boxes. So eventually, you’ll need fibre in order to be competitive with cable. I don’t see a problem with giving an incumbent carrier exculsive rights to these new Loops for awhile, as long as they continue to let others use the legacy copper.
So in this scenario you’d have three choices for vanilla internet access immediately, and two other potential competitors:
Cable
Copper
Fibre
*Wireless
*Other Passive Optical / Coax hybrids
Those regulations didn’t create CATV networks. Again, it created CLECs. Both CLECs and CATV are competition. CLECs are mostly competition for business customers, and CATV is mostly competiton for residential customers.
It is only related so far as they are trying to take a concept that works reasonably well to provide bare wire local loop service, and apply those rules to higher layer protocol behavior, something that has *never* been regulated in the same manner.
Otherwise they’d call it Loop, Circuit Neutrality or Unbundling, not *Network* neutrality, which includes back haul networks and Internet Exchanges where competition is extremely fierce on its own in a deregulated market.
It makes sense to unbundle last mile local loop wire because you only have a certain amount of connections to residental areas, and laying such cabling is expensive.
Setting up a router or 5E switch in a colocation somewhere is much less expensive than rolling cable out to 10,000 homes… No right of ways involved, but it will provide the Network Diversity necessary to ensure competition for services.
NN legislation as written removes financial invcentives to build out these facilities, as everyones routers are now mandated to behave under the same set of guidlines as everyone elses.
Why should anyone put a router in a colo if it’s mandated that can’t do anything differently than the ILECs ? Or if they do, they can’t charge any more or any less for it?
Fair enough. The issues of NN and UNE are often confused by NN proponents, because it serves their interests, but they really are two seperate issues and deserve to be debated as such.
Max. Can you email me at george DOT ou AT cnet DOT com?
Max,
First, let’s talk terms. Although I would rather not have a debate over terms, specifically CLECs and independent ISPs (because many CLECs are ISPs), I feel obliged to point out the following: In the DSL Order last August removing the Computer Inquiry restrictions, the FCC described the “core Title II principle underlying the Computer Inquiry obligations” as
(P. 97 at 52.) You will have a hard time erasing the non-discrimination policy designed to protect independent (i.e. non-facilities-based) ISPs in the Computer Inquiry regulations.
Second, let’s talk market definition. Usually markets are defined by their interchangeability with other products. When I want to watch TV, I rarely pick up the phone. Offering bundled products sometimes (maybe often) increases social welfare, so the economists tell us, but that is different than defining markets.
Now, let’s return to the merits. First: Deregulation. You say:
I am not sure what deregulation you mean. I suspect you are referring to the deployment of fiber by the telecoms. I am all for fiber deployment. When the franchising process was streamlined in Texas, AT&T started deploying fiber. The telecoms testified in Congress that cable franchising was the biggest problem for rolling out fiber, so Congress put together the COPE Act, which, if passed, might make fiber deployment elsewhere faster. But you seem to dismiss franchising as only part of the problem preventing deployment and that other deregulation is needed. So what other deregulation are you talking about? (And don’t say the DSL Order because AT&T and Verizon have unbundling/price restrictions akin to those in the Computer Inquiries until 2007, and they are both deploying fiber.)
Second: Competition in the Last Mile. You do make a semi-good point: People still have dial-up Internet access as an option to compete with the wireline owners’ broadband service. Of course, dial-up isn’t going to get you any sort of quality Internet video or voice services, but it does serve some people’s current needs.
You say:
and:
I think you mean by these statements that the unbundling regulations in the last mile (via the Computer Inquiries) were okay because of the high costs of deploying another wireline network, but now such regulations are not necessary because telecoms need incentive to build out, so they should be able to extract monopoly rents for awhile.
Based on the telecoms’ deployment of fiber in the current regulated environment (because of the merger decrees), I am not convinced that they need the additional incentive of monopoly or duopoly profits from restricting all other competition in IP video and voice (except cable, of course). Further, how long is “awhile” and how do we introduce competition once “awhile” has elapsed?
BTW many people see monopoly rents as a bad thing, even if for a short time, because (assuming no or imperfect price discrimination) there is deadweight loss.
Finally, you seem to argue that NN legislation will hamper network diversity, specifically as it applies to IP. However, you assume that in the future there will be enough ISPs to have diversity. Without some regulation, we will likely continue toward a duopoly or monopoly in Internet access. And with 1-2 ISPs, can you really expect much diversity? My point is that without regulation, no one might get the chance to put a router in a colo.
I don’t think non facilities based ‘ISPs’ should be protected. If someone refuses to buy any equipment or contribute to the infrastructure, but simply have another provider do the work for them and only handle billing etc., they shouldn’t be in business. (And, most aren’t BTW, even with lower than wholesale rates.)
The market has weeded them out.
I wasn’t talking about dial up. I’m talking about DSL. A Facilities based CLEC doesn’t order “DSL” from Verizon, they simply order the DS-0 that connects to that customer. It orders a circuit, not a service. Once you have control over that DS-0, you can run DSL over it. the ILECs can’t really complain, as it’s not taking up ports on their DSLAM, and it’s not generating traffic on their network, and their not routing the traffic.
My position is they should be able to treat the new fibre network exactly the same as a Cableco treats their network. Which is pretty much an even game for last mile delivery of Triple play services. Which, according to market research, is what the consumers want.
But once such a network is built, there is still the old copper network which should either be sold to people who can make use of it, They’ll need to either sell it or let their competitors have unrestricted access to it. It’s still useful for everything but TV, and it can even do that to a point.
Wireless technology is getting more mature, so that’s 3 High bandwidth triple play services platforms to choose from, BLC is another potential. That’s significantly better than the 1 option you have now (Cable). Again, I see more options, not fewer.
To address your greater fear: Anyone who works in the industry knows that with NN legislation in its current form, no one would bother putting a router in. I suppose if you start seeing empty Colos around, you might have a point, but I don’t , and I can’t see ILECs turning down revenue; even if it comes from their competitors. Even Verizon is not that stupid.
Max, earlier you said:
And in your last post you clarified that by “legacy copper” you meant DSL, not dial-up. Of course, you realize that under the DSL Order,
My understanding of that passage means–and correct me if I am wrong–that in any given market, the wireline owner does not have to share its lines with competitors for them to offer DSL. (AT&T and Verizon still do under their merger consent decrees until mid-late 2007.) And as far as I am aware, the wirelines in any market are owned by only one telecom, which means that if the telecom lays down fiber, the copper can go unused.
You suggest that the copper is a potential source of revenue, albeit from the telecoms’ competitors, and that even Verizon won’t pass that up. But when Verizon can kick everyone out in 2007 and become a monopolist or duopolist, why wouldn’t it? Why take a cut from a competitor when you can have all his customers instead?
If Verizon (or some other wireline owner) has the choice between getting a cut of a competitor’s revenues or getting all the competitors’ customers (by refusing to make the wirelines available), do you really think Verizon would choose the former? (I suppose we will find out when the unbundling/pricing requirements under Verizon’s merger consent decree expire in 2007.)
Under the DSL Order,
My understanding is that means wireline owners no longer have to share their wirelines, so the wireline owner in any given market could choose to be the only provider of broadband for that market using the telephone network. So how do expect to make sure this happens:
Are you suggesting FCC regulation or maybe legislation for unused pipe?
If Verizon did something like this, you’d have a good anti trust case.
What this actually means is that wireline owners don’t need to provide
you DSL service, they still need to provide you the DS-0 that you could
then run broadband over. It’s up to you at that point to turn it into
DSL, which you can given the right equipment.
My basic best case scenario for last mile access system
modelled after Internet Exchanges like the PAIX and the SIX, where you have a cooperative model to provide base infrastructure services. This means everyone pays their share of the last mile infrastructure based on utilization.
This would benefit the CLECs as it prevent circuit hoarding by ILECs, as they would be stuck with a big maintenance bill and no revenue to back it up if they decided they wanted to reserve large portions of the network without actually using it.
It would also benefit the ILECs, as the costs of maintaining that infrastructure are no longer theirs to bear alone.
Max, this is becoming helpful now.
First, what would be the antitrust theory against Verizon if Verizon stopped making its wirelines available? I assume it would be Section 2 of the Sherman Act, but what would the theory be? Essential facilities doctrine (after Trinko)?
Second, I would like to explore this DS-0 issue. DS-0, as I understand it, is digital service–specifically, the physicial interface–at a rate of 64 Kbps. Isn’t that a “broadband Internet access transmission service” that wireline owners don’t have to provide under the DSL Order? If not, what is the regulatory rule or statute that requires wireline providers to provide that physicial interface? (Specifics would be helpful.)
Did the coop models come into existence under the free market or by government intervention? If we wanted to spread the model where it has not been adopted under free market conditions, what sort of government intervention would be necessary?
Well, the horse has already left the barn in most places. They’ve already sold 50% of their wireline, and even if the regulations change they won’t be able to take those back without paying for them. Theoretically speaking, if they did decide to buy them back and then make them not available, they wouldn’t be able to recoup the costs via normal service subscriptions, so their shareholders would probably get a little pissed off.
It makes more sense to spend that money to build a completely new network, which is what they are doing with FIOS.
DS-0 = Phone line in laymans terms. For this discussion, it’s a pair of wire that starts at your house and terminates at a CO, where it can then be digitized for cross connect purposes. In traditional telephony, all voice calls were circuit switch Time Division Multiplexed 64kbps connections. DS-0 is simply the digital representation of this unit of measurement.
It’s important to realize that both DS-0 and DSL ride over the same physical wire:) It is not a “Broadband Internet Access Transmission Service” unless it gets plugged into a DSLAM one end and a DSL modem on the other (or is multiplexed), then it meets the criteria. Until that point it’s a private line, resold line and phone companies have always been happy to sell you those, if they don’t, you can always buy them from other parties. (Other CLECs.)
A comparision in the long haul market would be dark vs. lit fibre. Dark fibre is cheap, nearly free, but it’s expensive to light.
Same with DSL. DS-0s, or “phone lines” are cheap .but you need to have your own gear in order to turn it into something useful.
Free Market in the case of Internet Exchanges. There are no government regulatory rules which state who I can or cannot setup peering relationships with. The Internet works fine, regardless.
I think if the playing field is leveled between Cable and Telco networks at the regulatory level, I can see this happening eventually, based on some fundamental lessons of network architecture and engineering. Perhaps it will need a little prodding from government, if necessary. They’ll both eventually migrate to Fibre or Fibre Hybrids, and hopefully they’ll standardize on backend technology for interconnects and framing (Ethernet) instead of the mishmash of incompatible stuff that they run now.
BTW my guess is that DS-0 is not a “broadband Internet access transmission service” because the rate is less than 200 kbps, and instead it falls under the “basic services” that qualify as “telecommunications service” and is, therefore, subject to the common carrier requirements under Title II. So did the DSL Order fail to level the playing field, because cable companies don’t have to provide access to their wirelines, do they? If the telecoms do, is that because of interconnection requirements for basic services?
Here’s my take on the “broadband” playing field:
If you run a business (even a small business) you have a level playing field, and have many service options to choose from, because business service delivers superior margins, and most of the successful CLECs cater to this market.
If your residential/consumer market, the results are a bit more mixed, because CATV can offer Tripleplay (The residential market “product” de jeur) while telcos can’t. You also have the problem that CLECs, who ostensibly created to compete for these users, avoids this segment like the plague, because the support costs are higher (less experienced users, Zombie infested Windows machines, etc.), and consumers usually don’t give a rats ass (yet) about oversubscription rates or other Network engineering decisions that CLECs use to differentiate themselves from ILECs.
Theoretically, it would be fair to treat both CATV and ILECs the same, but you cant/couldn’t for technical reasons.
You can’t “unbundle” or provide wireline access to CATV networks the same way you do telco networks, and Congress hasn’t had much luck regulating the laws of physics or principles of electrical engineering:)
They did it with Telcos because:
A) the technology allowed it, and it’s easy to do.
B) Telcos were doing it already.
They didn’t do it with CATV because:
A) It would cost a lot of $ to do it, with little or no backwards compatability. Forklift upgrades suck…. and hurt the consumer.
B) They were only offering TV and maybe Data, no voice, or voice of dubious reliability.