Broadband Competition and the FCC

A few years ago the FCC adopted a new strategy to promote broadband deployment in the U.S. What had been in place up until this time was called open access. We trumpeted this policy to the world after our passage of the 1996 Telecommunications Act (and we were able to convince many countries to adopt it). We then proceeded to do away with it all together. What is open access? It is a rule that requires the phone companies to act as a wholesale provider i.e. lease their lines to third party providers (who pay the phone company for the service). If you think about the characteristics of the broadband market this makes sense, only one telephone line runs to your home and only one cable line runs to your home. This is because it is incredibly expensive to run a line onto every street and then to every home. Because of this very high barrier to entry, the telephone and cable markets are natural monopolies. The way around this inherent problem...open access, allow others to use the lines of the incumbents. If you remember the heyday of dial up modems, you had your choice of thousands of providers, the reason for this was because of the open access policy in place. In 2005, the FCC trashed this policy and decided to rely on competition between platforms. They stated "the broadband Internet access market today is characterized by several emerging platforms and providers". This decision defies logic and has quickly turned our broadband market into a cozy duopoly (for those of you lucky enough to have two broadband providers) and has succeeded in plummeting us down the international rankings. The FCC decided to rely on platform competition in a market that has a huge barrier to entry. Of course, none of these "emerging platforms" have materialized but the FCC, cable and telephone companies assure us that these new competitors are just around the corner (just keep paying Comcast $100 and they'll be sure it gets taken care of). Let's pretend this so called "third pipe" is here, hell lets even say a forth pipe has materialized. So the luckiest consumers have four choices for broadband, while implementing an open access policy could easily create hundreds (if not thousands) of competitors and bring consumers all the benefits that others are enjoying.  Net Neutrality is closely associated with these policy choices. Not only did the FCC decision in 2005 rid operators of open access requirements it also released them from a host of other responsibilities including Net Neutrality. Moreover, Net Neutrality is about network management. The two incumbents no longer operate in a competitive market and their new solution is to squeeze every last drop of profit out of their current wires before upgrading (ruining the Internet's level playing field in the process); instead of bringing consumers the speeds, prices and choices we see in other countries. Congress has the chance to correct the FCC's policy woes by passing a Net Neutrality bill and the Community Internet bill (which will guarantee a town's right to build their own broadband network and all the benefits that come with it.) Call up your Congresspeople and tell them to jump on as a cosponsor.


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