Why do you think DSL is such a ghetto? It's because it's subject to a higher level of regulations, and nobody wants to invest money in such a highly-regulated industry: http://www.dslreports.com/shownews/Goldman-Sachs-Wants-Veriz....
Classifying cable broadband under Title II will definitely have the effect of killing Comcast and Time Warner's profit margins. Hooray! Your tribe wins, and the big evil telecom companies will be cut down to size!
Except the telecom companies make up 6 of the top 25 companies with the highest U.S. capital expenditures: http://news.investors.com/technology/091913-671712-institute.... You think they're going to keep pouring all that money into low-margin heavily-regulated infrastructure? No, they'll do what Goldman wants and divest themselves of regulated business lines, and take that money and put it into a profitable business sector.
Earlier this year Google announced they were bringing Google Fiber here. Immediately all the ISPs announced that they, too, would be offering FTTH speeds. One company announced 300mbit, another rolled out 300mbit as part of a roadmap to gigabit, and the third actually rolled out gigabit well ahead of Google Fiber, which is still applying for permits.
I agree with you in principle that there is some margin below which companies will not invest in expensive capital expenditures. However there is also a margin above which companies will not invest in capital expenditures, because they have a sure thing going. The question is where those lines are.
The data from Austin show that in a market considered "exceptionally competitive" by American standards, companies are willing to invest an order of magnitude more in capital expenditures than they currently do just by threatening to create a lower-margin market. Google's work here, which so far consists of exactly 0 fiber installs, a landing page, and a contract with the city, has been so effective at transforming the market here that it's being argued by locals that it would be more efficient to forget about actually installing any fiber and they should just make announcements in one city after another and wait for the ISPs to do it for them.
In spite of the fact that one would imagine a Texas city to be less regulated than a California city, it isn't really that simple.
In Austin a strong majority of the utility poles are owned by the city. The ones that aren't are largely owned by AT&T, which complains very loudly that it is required to sell access to anyone who wants it at a price dictated by the Federal Communications Commission nationwide.
Meanwhile California (get this) opted out of much of the FCC regulation around utility poles and effectively allows a large private company to own and control the poles. This private company is made up of all the usual suspects like AT&T, Sprint, PG&E, T-Mobile, Verizon, etc., who seem to have formed a holding company to buy utility poles without anyone at the state being concerned about antitrust concerns. I'm not exactly sure what the requirements are to join--if access is "open" (for some definition of open) this may be how they circumvent the Sherman Antitrust Act etc.
California did pass "fair access" laws in 2011 [1] but as far as I can tell they only apply to "local publicly owned electric utilities" which presumably would not include AT&T and its utility pole holding company. There probably is some kind of regulation that in principle regulates competitive access to poles but how it compares to the FCC's jurisdiction in Texas it is difficult to say.
This is a side note, but we should really be having less talk about how we think regulation works and more case studies about how it does or doesn't work in these comment threads. "Less regulation == better internet" is a plausible model but so was the Bohr Model of the atom. "Is it correct?" is the question and that question can only be answered by looking at empirically what happens.
[1] http://leginfo.legislature.ca.gov/faces/billStatusClient.xht...
BTW that article showing how much capital they spent doesn't say what they actually spent that money on. My bet is most of it went to their cellular networks and other business interests. Their own data shows broadband investment has fallen[1]. Only 12 billion in the last 4 years. So clearly that 100+ billion each year isn't going to faster internet... at least not in landlines. Guess I can download videos to my phone slightly faster now. Yay.
At the same time we keep paying more[2]. And now they want to suck dry the content providers as well, who will probably only pass on the costs to us? Eff That.
Maybe they should actually reinvest their money into building out a 21st century network, and then they wouldn't need a fast lane.
[1]http://www.vox.com/2014/5/12/5711082/big-cable-says-broadban...
When capital investment into broadband is set by vote, do you think you'll be happy with the resulting level of investment?
I'll be accepting of it. At least we get the end results of our own failure to persuade the public or politicians.
As it is our fate is left to 'market forces'. Market forces have been undeniably screwing us for the better part of a decade. And it's looking like they want more for less in the future.
However, that being said, the big question is if the Internet is a common carrier or not. (I would argue that it is.) Apparently Ted Cruz and Al Franken agree as well. Nationalization isn't the answer, the proper framing of the industry is what's really needed.
They need to be force all ISPs to act as common carriers.
The facts are an example of regulation arbitrage, not some fatal flaw in Title 2 / Common Carrier. The 'Fatal Flaw' is the FCC doesn't say "All consumer facing ISPs are Common Carriers under Title 2" but "Technology X is under Title II and Technology Y is not".
Even from your own article "In this case what has Wall Street's heart all a flutter is the possibility for Verizon to shed all union-related workers and their pensions."
Dumping a ton of long term liabilities [pensions, union contracts] is the core reason. Divesting of some high cost DSL markets for an infrastructure provider [which is the regions they are talking about in the article, Upstate New York isn't exactly a market with roaring profitability due to low population density] is a secondary concern in that article and it basically said they invested 24 billion?
Title 2 doesn't require Union workers.
It also isn't a reasonable comparison to say "Title 2 Technology A lost to Non-Title 2 Technology B because Title 2 doesn't work" with such weak evidence. Why yes, investors want to reduce liabilities and cost centers. Magically, if you can enter a market with a lower liability and costs [due to less regulation] you prefer that option. If that isn't an option, magically, the market functions on an even playing field and everything competes on the merits of the technologies.
Somehow, magically, in places like Europe you get better ISP performance per $ with similar profit margins. Maybe the problem is not too much regulation, but how the regulation is being applied?
Places in Europe are also much more willing to outright subsidize telecom investment: http://bits.blogs.nytimes.com/2009/03/12/the-broadband-gap-w... ("Sweden has built one of the fastest and most widely deployed broadband networks in Europe because its government granted tax breaks for infrastructure investments, directly subsidized rural deployment, and, perhaps most significantly, required state-owned municipal utilities to create local backbone networks, reducing the cost for the local telephone company to provide service.")
Having a near-monopoly reduces risk significantly.
http://thinkprogress.org/climate/2011/11/13/366988/over-half... We subsidize Utilities & Telecommunications roughly equally via tax breaks.
Oh, and they get subsidies like Sweden too: https://www.ncta.com/news-and-events/media-room/article/2338
http://en.wikipedia.org/wiki/National_broadband_plan#Sweden Sweden didn't even put 1 billion in.
So umm, you are pretty providing all the evidence that greater intervention in the market than even I'm suggesting will improve things...?
confused
Do you think no one is paying attention? We know very well that VZN & ATT's capital spending is in wireless, not wireline:
http://stopthecap.com/2013/07/18/verizon-diverting-landline-...
Sure, one might see this as a sign that existing wireline regulations are already too onerous, and Ma Bell's poor daughters have to take their ball and go home. But the fact is, they know their wireline market is a captive one, and customers will stay no matter how little they invest. As soon as they bribe their way to a Sprint takeover, we'll see wireless investment head in the same direction.
http://www.techdirt.com/articles/20140514/06500227230/cable-...
Maybe if their margins drop, they will stop opposing community broadband:
http://www.consumereagle.com/2014/03/13/cable-companies-figh...
Population density is sometimes pointed to. It may be, but I also know that even many of the most rural parts of Norway and Sweden broadband [fiber] is prevalent.
I would guess competition (and less lobbying) would improve things. Perhaps Google Fiber can shake things up.
- http://www.bbc.com/news/magazine-24528383
- http://www.usatoday.com/story/tech/2013/08/07/reviewed-high-...
- http://bits.blogs.nytimes.com/2009/03/10/the-broadband-gap-w...
Sweden directly subsidized deployment of fiber in rural areas: http://bits.blogs.nytimes.com/2009/03/12/the-broadband-gap-w.... It also required municipalities to build certain infrastructure, which is something the U.S. federal government lacks the power to do.
Yeah, so did USA. The only difference was that Sweden actually got the fiber they subsidized. We've been over this before.
Regulation sets the market incentives. Having no regulation is just the choice to set the incentives to benefit those that control the natural monopoly.
Regional ISPs are natural monopolies and there's no other way but to regulate them. Same as you regulate electricity company, water, gas etc. You can't just let everyone dig holes around city to place new wires, pipes etc. There's no other way then regulating it.
BTW: If Comcast and Time Warner would move to a different methods of delivering access then it's all even better we will have more alternatives than just cable, or dsl. If instead they would decide to close down and sell, then I'm sure there would be plenty of other companies who would want to purchase their infrastructure with their subscribers to make money out of it.
Th Internet is too important to be left to Internet businesses.
To which evidence are you referring?
Mexico is another outstanding example of what happens when you deregulate telecoms. When Carlos Slim had his nationally-endorsed monopoly with TelCel/TelMex, prices were exceptionally high however, once his guaranteed monopoly period expired and other companies could begin to compete, the prices dropped dramatically. Although Slim's company has a huge 10 year head start over other companies in terms of infrastructure -- so the monopoly effects are still prevalent. For example, a cell plan that costs me $100 in the US, costs me over $125 in Mexico. In terms of purchasing power, that's a massively expensive difference, considering many other things in Mexico are substantially less expensive than the US -- except electricity and telcoms, which are far more expensive because of de facto and de jure nationalization.
There's a perception that "Europe is better" that seems to be almost a stereotype. I happen to live in Avignon and have a close-up view of things that are better in Europe versus the US and some things ARE better, but there is a tradeoff. Avignon has 20% unemployment for example. It has traditionally been very expensive to start a business in France as well. The labor rules and bureaucracy makes it exceptionally difficult to hire and fire employees. Public transport in Europe isn't universally better than the US. Most people only visit places like Paris, Berlin, London, etc. However, when compared to New York, Chicago and San Francisco, europe's transport isn't that much better. Spend a few minutes in the Paris CDG airport and compare that to JFK.. not much difference. In the less famous cities and regions of Europe, public transport consists of possibly a train station and some buses. When I was in Wilstedt, German (near Hamburg) there was a bus, but it was so infrequent that it was useless. In Provence, the big cities have public transport, but if you're in Salon de Provence, there isn't much. I wouldn't want to live anywhere else, but the rose-colored view of Europe is often not based in reality, but on an idealized view. La vie en rose to be sure.
The "Better in Europe" meme isn't always true. Ask some of the people actually running businesses in France. Here's an interview with a French CEO that's interesting. http://www.cnbc.com/id/101608867
And then you have this nonsense:
http://www.france24.com/en/20130501-france-minister-montebou...
(A French Minister blocked the sale of Dailymotion to Yahoo.)
I am not an expert on Europe (or anything really,) however I did have to say something about the "Europe is better" implication.
Government control can be good when the traditional market fails abysmally.
