While the FCC busily tries to take greater control of the Internet, it’s important to remember that is is the agency most responsible for creating the broadband duopoly in the first place. The US backbone continues to expand and it remains the envy of the world. Unfortunately, the unwashed masses who pay for duopoly internet connections continue to be shackled to outdated, artificially scarce last mile bandwidth. We have been sold out by our elected elites and the bureaucrats they oversee. Even Russia has more last mile competition and it is getting continued improvement as a result. In fact the average Russian just edged past the average American in real world bandwidth. Don’t believe me? Look at the graph.

It’s time to take control of our broadband and do it locally. The feds who got us into this mess to begin with are only going to ask for more control and more money. As long as so much control remains centered in Washington DC, nothing will improve unless you’re a telco or cable guy.

While may Europeans and Asians continue to enjoy ever faster broadband at falling prices, most Americans have pretty much the same broadband they’ve had for a decade, and many of us are paying more for it. Why? Even the most populated areas typically have only two providers, and rural areas rarely have more than one. Without any competitive pressure to improve, things will stay same or possibly get worse.  How can this happen in the most competitive market in the world?  Our laws have established a brodband cartel and continue to support it. The insure things stay that way, the duopoly lobby is taking a small chunk of billions they get from us to buy Congress’ loyal support. Out of all tech companies, the Duopoly’s biggest players are spending the largest. Lobby money is the music that makes Congress dance, and $11.3 million makes sure that lawmakers are dancing in double step to the Duopoly’s tune.

Here’s a breakdown of how much companies spent in the second quarter, rounded to the nearest thousand, according to disclosures filed by midnight Tuesday:

Verizon: $4.4 million

Comcast: $3.82 million

AT&T: $3.08 million

Read more: http://www.politico.com/news/stories/0710/40087.html#ixzz0ul0XiYHa

Every now and then a new study of world broadband rankings comes along. One recently released by the OECD in France shows the US continues to hold firmly at the bottom of the developed world in terms of available bandwidth and penetration. At the same time we come in at the top for $$ per Megabit.

The US comes in 19th when measured on “cost per Mbps.” The OECD numbers use Purchasing Power Parity to ensure that the dollar amounts are comparable between countries, and US broadband turns out to cost $8 for each advertised Mbps of service. In Korea, it’s $1.76. The UK, not known for fast speeds, but having decent competition thanks to line-sharing rules, is $1.98. Japan is $2.33 (ARS Technca)

The one glaring difference between the US and the other developed nations is that those with better, cheaper connectivity have mandated line sharing. That’s something the FCC declared no longer needed due to  “adequate competition” from a duopoly.  Obviously Washington’s “adequate competition” still falls short.

I’m guilty of spending a great deal of time ranting about how we lost competition over the last mile as access transitioned from dial up to broadband. News  of  new competitor Allied Fiber reminds me that there is also a largely uncompetitive market in the backbone:

Newby, who was the chief strategy officer at colocation provider Telex, is pretty impassioned about his plan to bring wholesale fiber to places where existing backhaul providers may not go. It’s a plan similar to Google’s experimental fiber network for consumer broadband, but enacted on a much larger scale, and for businesses. Newby believes that in underserved areas where Allied Fiber will have a presence, the cost of bandwidth will be driven down significantly because Allied will be willing to sell access to the long haul network, at competitive rates, to anyone who wants them — something the incumbents aren’t inclined to do. (Gigaom)

In the late 90’s, there was a tremendous fiber backbone land rush, with start ups investing billions to carry the explosive traffic they expected the booming Internet would generate. Low operating costs, and lots of demand from a growing number of last mile access  providers who fought intensely for subscriber dollars seemed to insure success.  Unforeseen by most was the ability of the duopoly to kill a competitive market with intense lobbying combined with limiting bandwidth demand  by constraining last mile access and a little help from a recession

Instead of investing in infrastructure, the telco and cable duopoly was obsessed with mergers and acquisitions. Nearly all of the new investment by duopoly players during this time was focused on enlarging geographic footprint. While objections were raised, every large merger was approved by a woefully negligent government. Aided by a recession, new multiplexing technology and regulatory manipulation, the duopoly was able to overwhelm most of the start ups . Their assets were bought up for pennies on the dollar by a handful of incumbents whole control the backbone today.

In our current anti-competitive environment a new access provider faces challenges that extend beyond the last mile. Even when a new competitor manages to overcome the local loop roadblock, it will likely be disadvantaged by inflated back haul costs from an incumbent.

Lets hope that Allied fiber not only open new markets in the under served areas, but also helps level the paying field in the rest.

A little blurb from Time, obviously a Cisco image piece, gives us some idea of what new routers can do with existing fiber optics:

Cisco’s CRS-3 router made a bit of a splash when it was announced on March 9, but the power of this new device hasn’t yet sunk in. Consider: The CRS-3, a network routing system, is able to stream every film ever made, from Hollywood to Bombay, in under four minutes. (Time)

While I’m not suggesting that we’re ever going to see this kind of performance at the office or at home, it sheds light on two arguments for an open last mile connection and competition. (1) The capacity of existing backbone networks keeps improving with little investment. (2) The cost of delivering ever greater bandwidth continues to fall.

I am not arguing that the incumbent carriers are not entitled to charge whatever they want for whatever quality of service they chose to deliver. I am arguing that businesses and consumers are entitle to more than one ot two fixed line choices per market. In every market where the lat mile of copper has been opened to competition service has improved, prices have fallen, and no incumbent carrier has been bankrupted. In fact most have upgraded the last mile service to compete.

As the FCC unveils it’s laughable broadband plan, no suggestion of new fixed line competition is made.

While the big carriers continue to scale back fiber deployment,  the smaller independent telcos are pushing speeds higher over new fiber networks. How can this be done without the massive economies of  scale? It’s never been cheaper, and costs continue to decline. Consider the case of a rural telco with 9000 subscribers delivering 60/30 MBPS connections. That’s something we can only dream about here in AT&T’s Dallas-Fort Worth DSL ghetto.

At the end of 2009, Canby had brought Fiber to the Home-based services to about 1,000 homes-a major milestone given the fact that the ILEC has only 11, 000 access lines and 9,000 customers.

Since it pulled out its higher speed fiber products out of National Exchange Carrier Association (NECA) it has been able to offer a number of speed tiers under its Fiber Optic Zone (FOZ) brand, including on the high end a 60/30 Mbps service in addition to a 40/20 Mbps and 20/10 Mbps service tier. Alternatively, other telephone cooperatives are restricted to offering 3-5 Mbps broadband services.  Keith Galitz, Canby Telcom’s President, said that as it rolls out its GPON-based fiber network, its biggest challenge is keeping apace of bandwidth demand. “It was only a year and a half ago that we introduced 10 Mbps on our fiber network,” Galitz explained. “That’s how fast this thing is moving where the demand is there.” (Fierce Telecom)

I believe the small telco is the model for a better broadband future. With large protected territories, and laws written to squash competition, the large telcos and cable operators have no incentive to offer more bandwidth at a fair price. It’s not from lack of capital. It’s how the capital is used. The smaller independents tend to stay focused on their home markets instead of investing in acquisitions, wireless and pay TV.  They also tend to employ locals and are more responsive to local market needs. I’m not suggesting that we divide cities into a patchwork of small monopolies, but rather open the infrastructure to allow for small providers to enter urban markets as competitors.

With the world economy in a pervasive funk, it’s worth noting that the internet continues to grow. Both in terms of TLD’s and traffic, exponential increases continue. Even with artificial bandwidth limits, this demonstrates people want to interact, learn and do more business online.

According to the latest Domain Name Industry Brief from VeriSign, the total base of registered Top-Level Domain Names (TLDs) grew in 2009.

VeriSign reported that in 2009, the base of TLDs expanded by 15 million domains names to a total of 192 million domain registration across all TLDs. (internet news)

The online marketplace wants to grow. Not even outrageous prices and stagnant bandwidth imposed by a duopoly can impede it. Imagine a free market with gigabit connections at priced lower than the megabit connections we have.

Here’s proof that the first world standard for broadband is moving to 1GBPS.The technology is ready and cheap. In markets with actual competition, it’s an upgrade that fits right into the maintenance cycle.

My friend David Isenberg, who organizes the wonderful Freedom 2 Connect (F2C) conference, sent me a link to a story this morning. The gist of the news is that ReggeFiber, in partnership with Dutch incumbent KPN, will make 1 Gbps the standard connection speed for all FTTH customers. The company currently has more than 300,000 customers and is on target to grow to a million subscribers. Zeewolde is the first city that will get the service.

How can Reggefiber do this? The company has seen steep declines in the price of equipment — from modems to central office stuff — which has allowed it to offer this service. (Gigaom)

In light of this news, the FCC’s draft broadband plan becomes even more laughable. What’s not laughable about allowing a duopoly to control US broadband is how this will continue to erode economic opportunity.

Previously we had pointed out that the Telcos can take care of their own. They have a revenue stream (well used to, it is getting a little frayed), that is mostly never ending. The resource is finite but better than what anyone else has. So why do they want to do this to their more lesser mortal peers? —

In the dead of night, just before the latest draft of the Stevens bill came out, a helpful Telco lobbyist inserted a little provision to stack the deck in the case of judicial review. Section 1004 of the Stevens draft now places exclusive jurisdiction for all decisions by the FCC in the D.C. Circuit. This includes not just network neutrality, but media ownership, CALEA, wireless issues, anything.

Why would anyone do that you ask? Because the D.C. Cir. is, without doubt, the most activist court in the land when it comes to pressing its vision of media and telecom policy. More than any other court, the D.C. Cir. can be credited with destroying hope of telecom competition in the United States by perpetually reversing and remanding the FCC’s efforts at rulemaking and enforcement until the FCC finally gave up and effectively deregulated. The D.C. Cir. is also responsible for vacating (eliminating by judicial fiat) the rule preventing cable companies from owning television stations where they have cable systems, and overturning much of the FCC’s cable and broadcast ownership limits. Finally, through the legal doctrine known as “standing”, the D.C. Crcuit has done its best to make it impossible for regular people to challenge FCC decisions or bring individual cases on antitrust grounds.

Source: WetMachine

Why? Well to make it more costly to litigate telecom policy. So if you are a small coop outside to Duluth and are being destroyed by some arcane rule your choice would be under this suggestion having to hire a high priced heavy weight from Georgetown.

There is something else that bothers me about this that has nothing to do with Telecom. Consistency. In the history of this country we have applied the mindset that one tries a case in the jurisdiction of either the defendant or the place where the infraction occurred. Even at appellate, you remand to the closest circuit district from which the original case issued. And NOW we are going to turn this on its ear? The system as envisioned has worked reasonably well, there is no need to change it at this late date.

This provision needs to be removed. Verizon can afford to get on a damn airplane like anybody else.

I’ll be blunt — this stinks!

“People are paying money in to go to college,” she said, “I don’t think any of that money should be used to subsidize the broadband effort that really is competing with the private sector.”

– Sen. Lisa Marrache, the assistant Senate majority leader

Oh, you are asking what’s the argument? The Univ of Mass is considering going into partnership with several communities and private enterprise in rural Maine locations to get broadband to these localities that are not being served now. The beef of course is that the University is competing with private enterprise. —

Marrache said constituents raised the issue with her after charges were leveled this summer that UMS is competing with private companies in the broadband business.

Severin Beliveau, an Augusta attorney representing FairPoint, blasted UMS at a meeting of the State Broadband Advisory Council, arguing their participation in a group seeking federal funds was improper competition with the private sector.

“I am concerned at what the university is proposing here, because it is receiving a form of subsidy, no they are in fact receiving a subsidy from taxpayers, in competing with the private sector,” he said.

Jeff Letourneau, associate director of information technology at UMS, said the university is part of a private-public partnership created to provide broadband capacity at a “wholesale” level and the university’s role is minor.

“The grant from the federal government went to GWI [Great Works Internet] and two private investors,” he said. “As for tuition subsidizing our broadband efforts, that does not happen and will not happen.”

I am a dirty stinking capitalist of the first order. There are not many $$ deals I won’t turn down. (Though there are moral ones I won’t touch.) But if private companies don’t want to service these areas; and that has been the case for Verizon, now FairPoint for years, then by God you have no right to complain. You were offered a franchise there Telcos, decided it was not worth your effort and now complain when your unopened candy bar is taken away from you. Pffft, tough. Capitalism works best when there is fair exchange going on. Capitalism does not work where monopolistic haunch sitting goes on and the citizenry suffer as a consequence.

Which brings me to the title of this missive. You have to ask yourself whose ox gets gored if UofMaine went thru with the deal? Why the resident Telco is who. That ladies and gentlemen has to be the back story. As a fellow conservative I know says — flare drops. This is only a cover to prevent competition.

Serve your constituents Marrache.

Link.
HT:WetMachine.