Yet More Telecom Competition

by on January 17, 2006 · 16 comments

Here’s another example of the ever-increasing competition in the telecom industry: BusinessWeek reports that Rupert Murdoch is considering investing a billion dollars to transform the DirecTV satellit network, which currently allows only one-way transmission of high-bandwidth content, into a full-fledged broadband network offering voice, video, and data service. That would put it squarely in competition with the cable industry and the Baby Bells, both of whom are moving toward that same type of “triple play” broadband service.

If Murdoch follows through with this, and if the Baby Bells roll out fiber-optic networks as planned, that will mean that most homes will have at least three options each for voice, video, and data services.

Actually, there are more choices than that: there are already a half-dozen mobile phone companies competing for voice business. For video, consumers have the option of broadcast TV, which now features crystal-clear picture due to digital transmission. And Internet Giants like Google, AOL, and Apple seem to be announcing new Internet video options every month. And for data, there are dedicated lines available at the high end, and dial-up modem access at the low end of the market, not to mention a growing number of WiFi hotspots. In short, the typical consumer has a dizzying array of choices for all of his telecom needs.

Why exactly are we still regulating these industries as though they’re natural monopolies?

  • http://www.techdirt.com/ Mike Masnick

    Heh. Finally found something I disagree with you about. First of all, your discussion about voice and video competition should be separate from the argument.

    The battleground is 100% about data, because everything else only matters on top of the data pipe. Voice and video should be on top of the data pipe — so only if the bells are successful in killing network neutrality is there more of a risk of losing competition there. So, we agree that there’s competition on that.

    However, your view that there’s competition in data is naive. Not sure how much you know about the cost of building wireless data networks (or understand the extensive limitations associated with one), but Murdoch’s $1 billion isn’t going to get him very far at all.

    To build a *real* ubiquitous nationwide network is quite expensive, and Murdoch’s billion will likely mean a partnership with someone else, rather than his own network. Wireless networks simply can’t handle the capacity or the bandwidth that a fiber network could. They may get there someday, but it’s someday far in the future, and it is going to be costly.

    So, don’t believe the marketing spin. Murdoch won’t offer a data network any time soon (and remember, DirecTV has tried and failed twice in the past to be a broadband provider — and no one has explained why this time will be any different). Wireless networks aren’t the answer, and won’t be for some time — so we’re left with fiber (and some cable).

    Have you seen what’s gone into building out the fiber networks these days? The telcos are tearing up towns (read the stories about Verizon FIOS in Tampa), doing all sorts of damage trying to install fiber. If we want real broadband networks, you want to allow multiple companies to go in and redo the same damage over and over again. Meanwhile the cable and telcos are doing everything they can to make sure no one else is ALLOWED to lay lines in the same areas — meaning they’re setting up the natural monopolies themselves.

    From a network standpoint, a real broadband network IS a natural monopoly, and should be treated as such. Not doing so is doing an awful lot of damage to our economy and our ability to offer real broadband.

    I find myself in agreement with you on so many things, I’m a bit disappointed that you appear to have posted this without really understanding the telco/broadband world.

  • http://www.techdirt.com/ Mike Masnick

    Heh. Finally found something I disagree with you about. First of all, your discussion about voice and video competition should be separate from the argument.

    The battleground is 100% about data, because everything else only matters on top of the data pipe. Voice and video should be on top of the data pipe — so only if the bells are successful in killing network neutrality is there more of a risk of losing competition there. So, we agree that there’s competition on that.

    However, your view that there’s competition in data is naive. Not sure how much you know about the cost of building wireless data networks (or understand the extensive limitations associated with one), but Murdoch’s $1 billion isn’t going to get him very far at all.

    To build a *real* ubiquitous nationwide network is quite expensive, and Murdoch’s billion will likely mean a partnership with someone else, rather than his own network. Wireless networks simply can’t handle the capacity or the bandwidth that a fiber network could. They may get there someday, but it’s someday far in the future, and it is going to be costly.

    So, don’t believe the marketing spin. Murdoch won’t offer a data network any time soon (and remember, DirecTV has tried and failed twice in the past to be a broadband provider — and no one has explained why this time will be any different). Wireless networks aren’t the answer, and won’t be for some time — so we’re left with fiber (and some cable).

    Have you seen what’s gone into building out the fiber networks these days? The telcos are tearing up towns (read the stories about Verizon FIOS in Tampa), doing all sorts of damage trying to install fiber. If we want real broadband networks, you want to allow multiple companies to go in and redo the same damage over and over again. Meanwhile the cable and telcos are doing everything they can to make sure no one else is ALLOWED to lay lines in the same areas — meaning they’re setting up the natural monopolies themselves.

    From a network standpoint, a real broadband network IS a natural monopoly, and should be treated as such. Not doing so is doing an awful lot of damage to our economy and our ability to offer real broadband.

    I find myself in agreement with you on so many things, I’m a bit disappointed that you appear to have posted this without really understanding the telco/broadband world.

  • http://www.binarybits.org/ Tim

    Mike,

    I appreciate your comments. I definitely agree that data’s the important battleground. You’re clearly right that as long as there’s a competitive market for data networks, voice and video services can piggy-back on it. I mentioned the others because that’s where a lot of the regulatory arguments at the moment are: Missouri, for example, is currently considering cable franchise reform which would allow Baby Bells to offer video services over their fiber lines. This strikes me as a no-brainer.

    As for the limitations of satellite broadband, I find your argument persuasive. Given the one-to-many nature of the technology, it does seem unlikely that you’d be able to squeeze very much individualized data to each of the millions of customers served by a particular satellite. I’ll consider myself duly corrected–that’s what I get for taking a technology story in the mainstream press at face value…

  • http://www.binarybits.org/ Tim

    Mike,

    I appreciate your comments. I definitely agree that data’s the important battleground. You’re clearly right that as long as there’s a competitive market for data networks, voice and video services can piggy-back on it. I mentioned the others because that’s where a lot of the regulatory arguments at the moment are: Missouri, for example, is currently considering cable franchise reform which would allow Baby Bells to offer video services over their fiber lines. This strikes me as a no-brainer.

    As for the limitations of satellite broadband, I find your argument persuasive. Given the one-to-many nature of the technology, it does seem unlikely that you’d be able to squeeze very much individualized data to each of the millions of customers served by a particular satellite. I’ll consider myself duly corrected–that’s what I get for taking a technology story in the mainstream press at face value…

  • http://www.6-besh.co.il/ Ã??Ã?©Ã??Ã?© Ã??â??Ã??Ã?©

    I mentioned the others because that’s where a lot of the regulatory arguments at the moment are: Missouri, for example, is currently considering cable franchise reform which would allow Baby Bells to offer video services over their fiber lines

  • http://www.6-besh.co.il/ Ã??Ã?©Ã??Ã?© Ã??â??Ã??Ã?©

    I mentioned the others because that’s where a lot of the regulatory arguments at the moment are: Missouri, for example, is currently considering cable franchise reform which would allow Baby Bells to offer video services over their fiber lines

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