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Comments from Frankston, Reed, and Friends

Wednesday, December 13, 2006

BobF at 7:45 PM [url]:

The FTC Must Look Beyond Broadband

This February FTC is going to host Workshop on Broadband Connectivity Competition Policy.

It’s good that the FTC is showing interest in this topic but the workshop is still framed within the FCC's fictional world in which electrons have intrinsic meaning. This should be an antitrust case rather than an attempt to tweak faux competition. We should be looking for a real marketplace not more micromanagement of a dysfunctional system.

The FTC should be asking a more fundamental question: Why is our vital infrastructure, our rights of way, owned by companies whose business is selling us services? It’s as if we had to lease back our streets from a delivery company like UPS or FedEx. Imagine if our sidewalks were owned by service providers.

The FCC’s rules, The Regulatorium, were defined in a time when analog signaling was the norm. Analog signals degrade and you need to be very careful in building your transport in order to preserve the signal while minimizing the cost. Digital signals don’t degrade and have given us abundant capacity and have allowed us to view the transports as simply bit transports independent of the contents and the services. Radios are simply part of the mix and no radio bits are not all special.

The FCC’s effort at preserving their service model has assured that we continue to pay third parties for a very limited kind of telephony. Voice over the Internet has demonstrated that we could do far better if we weren’t constrained by a turn of the century, 1900, not 2000, definition of telephony.

The Internet puts a lie to the service model by demonstrating how a fungible digital transport provides abundant capacity and how even voice traffic can “just work” at essentially no incremental cost.

It’s a classic folie á deux. The FTC is in the position to step back and reexamine the defining premises.

The industry is very aware that the new technologies create abundance. They are explicit about their need to assure scarcity in order to preserve their existing business model.

Broadband is very much in this tradition. Just as we used modem to communicate despite the carriers, we managed to repurpose a system designed for one-way television redistribution and use it to interconnect our local networks with the rest of the Internet.

With Broadband we are forced to pay for redundant infrastructure. It’s as if we still had competing light companies that each ran their own wires. That alone should indicate something is very wrong in the marketplace.

The legacy of service pricing is that we are paying for pieces of infrastructure out of context thus assuring high pricing and a lack of synergy. We cannot take advantage of connectivity as infrastructure if we can only lease what the carriers choose to provide.

Just as we own the wires in our homes, we should own the wires in our communities. We already paid them when we funded the "natural monopoly" and continue to do as the FCC continues to grant them control.

In the last ten years home networks have gone form nonexistent to gigabits over copper and hundreds of megabits without wires.

Yet to communicate with your neighbor you are limited to the capacity the carriers have chosen to provide and pay a price based on the value of services not the actual cost of the local transport.

Just as we know how to take advantage of the transport within our homes, we know how to take advantage of the abundant transport in our communities. It’s really our Internet—the Internet is not another television channel or service.

But we will only discover what is possible if the FTC examines the FCC’s Regulatorium and asks why it still exists in 2007.

Preserving a marketplace that is far far past its shelf life is more than a matter of price. It prevents the marketplace from renewing itself and it leaves us at the mercy of the carriers in times of crisis.

The FTC must insist on a real marketplace device in terms of a transport that creates real competition and gives each of us a chance to discover what is possible and create real value.

For more, see the Archive.

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