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[ NNSquad ] Re: Fight over municipal broadband rules in North na

On Tue, 15 Mar 2011, Richard Bennett <richard@bennett.com> wrote:

Interesting comment, Bob. The rural broadband issue actually
has more to do with cable TV-type services than with Internet
services, actually. Muni broadband networks have copied the
triple play revenue model from cable, and always have
substantially more cable TV customers than Internet customers.
There's a huge element of bad faith bargaining on the part of
the towns that operate their own triple play networks in
competition with the cable company. Towns previously granted
the cable company an exclusive license to offer cable TV, which
encouraged the cable companies to invest in a community network
on the expectation that their investments would ultimately pay
back the investment and earn a profit.

It seems to me that communities should be able to operate their
own networks, but before they go into the cable business they
need to compensate the cable company for their investment,
preferably by buying them out.  They're obviously not going to
do that, of course.

Numbers please.

How much money have the one or two cable companies made under their
formal government granted mono/duopoly?

Who owes whom?

Why should we not simply end the mono/duopoly by allowing others
to offer Net connection service?

ad general principle: Of course we need not "compensate"
companies that exist only because we have granted them a
government enforced mono/duopoly.  The cable companies do not
have a right to a government mono/duopoly.  No right whatsoever.

The larger issue is that demand for broadband Internet simply isn't very high in rural communities, so when you carve up the demand among two wireline providers and the two satellite TV providers, it's hard for the wireline networks to break even. The ultimate solution to this problem is government-funded demand creation programs that enable people to get cheap PCs and education in the benefits of the Internet.

There's already a lot more broadband Internet deployed in the US than there is demand for it; something like 95% of Americans can get broadband if they want it, but only 65% actually sign up. You don't solve that problem by building more networks.


The numbers are that the cable companies are making a fortune because they have been granted either a monopoly or a duopoly.

According to the theorists of the free market, of course you
solve the problem: competition drives down price.  Why should we
continue to protect cable companies?  Companies which by their
own admission cannot compete?


On 3/15/2011 1:39 PM, Bob Frankston wrote:

While the cable companies have a visited interest in limiting competition we need to be more concerned about framing the debate on the presumption that the only funding model is "cable".

There's the implicit assumption that simply having a city create its own broadband network is automatically a good thing. But as I keep pointing out the business model of expecting people buy services in order to fund infrastructure is problematic, even more so when it is competing with commercial providers with deep funding. As we've seen in Burlington VT, if a city borrows from bondholders it is in hock to them but doesn't have the scale and deep pockets a company like Comcast has to cover the debt even if the particular cable system is not profitable.

Think of the 911 example -- why does the emergency respond system depend on people making enough phone calls to fund it. If the model makes sense we'd use it to fund fire and police services. But it doesn't make sense and we fund the fire and police services. So why do we fund the emergency signaling system by taxing phone calls. Even worse, we then use this funding model abused <http://www.alternet.org/news/150132/how_politicians_are_using_911_emergency_services_to_scam_millions_of_consumers/?page=1> and used as a way to make some VoIP services illegal by demanding they pay for 911 service in an arbitrary location.

What cities need to do is change the framing and build a common infrastructure as an asset for the city that they pay for once and own. They can then use it all purposes ranging from police and traffic lights to exchanging bits for consumer applications like video and medical monitoring and home fire detection.

We need to assure the legislation doesn't prevent a city from investing in new fiber or Wi-Fi or using existing copper as infrastructure completely distinct from services be they "cable" or simply exchanging bits (sometimes called "Internet").

Too bad some of the loudest voices are the most conservative -- advocating that cities emulate the old line cable companies rather than embracing the future by creating new infrastructure and opportunity.

The cable companies would still oppose funding infrastructure but wed have to explain the wires are like sidewalks and not like television. Id welcome a real debate.

-----Original Message-----
From: nnsquad-bounces+nnsquad=bobf.frankston.com@nnsquad.org [mailto:nnsquad-bounces+nnsquad=bobf.frankston.com@nnsquad.org] On Behalf Of Lauren Weinstein
Sent: Tuesday, March 15, 2011 14:48
To: nnsquad@nnsquad.org
Subject: [ NNSquad ] Fight over municipal broadband rules in North Carolina

Fight over municipal broadband rules in North Carolina

http://j.mp/fGNZe9  (Innovation Policy Blog)


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-- Richard Bennett