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Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.





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American Broadband

Scientific American has a gloss in this month's issue on the decline of U.S. broadband access over the first decade of the 21st century (no link provided because access is limited to paying subscribers):

At the turn of the millennium, the U.S. had some of the best broadband access in the world. It reached more homes, and at a lower price, than most every other industrial country. Ten years later the U.S. is a solid C-minus student, ranking slightly below average on nearly every metric.

Just how the U.S. lost its edge and how it plans to get it back are the issues before the Federal Communications Commission as it prepares to launch the most significant overhaul of network policy since the birth of the Web. As part of last year's stimulus package, Congress provided $7.2 billion to expand broadband access to every American. It also required the FCC to outline a plan for how to make that happen. The outcome of the FCC's deliberations, due February 17, could determine not just control over the broadband infrastructure but also the nature of the Internet itself.

The reason for this decline can be traced the the FCC's decision (under the stewardship of Bush administration appointees) to exempt the telecoms and cable companies from the open access provision of the 1996 Telecommunications Act, which forced the local telephone monopolies to grant access on reasonable terms to any and all long-distance telephone service providers. The result of this act was a dramatic reduction in long-distance phone costs, and a corresponding decline in profits for the telecoms.

The exemption the FCC put in place for broadband services has had the direct effect of putting the U.S. in a distinctly inferior position on broadband access across a variety of metrics, most notably download speeds and cost of service. But Verizon and Comcast love it. With the FCC now under new management, it looks as though it is poised to rescind the previous rules and bring open access back to internet services.


Comments

Um, WTF? Increasing monopoly by reducing long distance competition REDUCES prices??! Surely the problem is due to lack of last mile competition.
@Tony: I think you read something backwards. I agree the sentences could have been structured more clearly, but the point is that the "1996 Telecommunications Act, which forced the local telephone monopolies to grant access on reasonable terms" created more competition and lower prices in long distance call markets. By choosing to "exempt the telecoms and cable companies from the open access provision", the Bush FCC preserved the existing monopolies in the ISP and "last mile cable" businesses, and prices remained high while competition failed to overcome the barriers in place.

For example, Japan has a similar "open access rule" on Internet cable and backhaul providers there, and they already have 100Mbps lines for $50/mo (or less!) to most consumers. In Los Angeles, even where many Competitive Local Exchange Carrier offices exist, all $50/mo. will get you is about 10Mbps down and 1Mbps up over a monopoly cable connection.


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