I somehow missed this excellent ITIF paper by Robert D. Atkinson and George Ou when it came out at this point last year, but George has just dusted it off, made a couple of updates, and re-posted it over at the Digital Society blog. Worth reading. It touches on a lot of the same case studies I have been documenting in my ongoing series, “Problems in Public Utility Paradise.” In particular, it focuses on the UTOPIA and iProvo fiascos out in Utah. Here’s a key takeaway from those case studies:
The lessons learned in Utah is that projected uptake models and deployment plans don’t always come to fruition, and when that happens the consequence is failure. For UTOPIA, the project was projected to reach 35% uptake rates by February 2008 but the reality was less than 17% uptake. UTOPIA had also hoped for 17% uptake from lucrative business customers but the reality was only 2 to 3 percent. Provo County’s iProvo was hoping for 10,000 subscribers by July 2006 with the assumption that 75% of those customers would subscribe to lucrative triple play services, but the reality was 10,000 customers in late 2007 with only 17% of those customers subscribing to triple play. Many consumers were quite happy to subscribe to existing broadband cable or telecom providers. The consistent theme in Utah was an overestimation of the uptake rates and the underestimation of competition from incumbent cable operator Comcast and telecom operator Qwest which led to consistent underperformance.
Ouch. For more details, see this old essay of mine about UTOPIA from 2008, and this piece from last Sept about iProvo. Not a pretty picture. As I say every time I pen a piece about the latest muni failure du jour, these case studies should serve as a cautionary tale about the dangers of grandiose, centrally planned broadband schemes. There is no such thing as a free lunch. Network-building is hard, and politicians usually aren’t that good at doing it.
FWIW… Just upgraded — at no cost — to Verizon’s 20/5 FIOS plan. Been hitting almost 25 megs pretty consistently today. I was on Verizon’s 10/2 plan beforehand and the 5/2 plan before that. Didn’t notice as much of a difference when I moved from 5 to 10, but jump to 20 is definitely noticeable on big file downloads.
Cox Cable has also been offering nice speed boosts in my neighborhood (McLean, VA) recently, so I suspect that’s why I was offered the free upgrade yesterday when I called Verizon about adding some new HD channels to my FIOS TV package.
Ken Ferree and I just filed an amicus brief with the D.C. Circuit in what could be among the most important First Amendment cases involving economic regulation in years: Comcast’s challenge to the FCC’s cap on the maximum size of a cable operator’s nationwide subscriber-audience. While few may feel righteous indignation at limitations targeted at large corporations such as Comcast or Time Warner, the larger principle at stake here is deeply important: Will the First Amendment provide a meaningful check on what USC law professor Chris Yoo has called “architectural censorship” (i.e., so-called “structural” regulations that “have the unintended consequence of reducing the quantity, quality, and diversity of media content”).
In a nutshell, we argue that that:
- The provisions of the 1992 Cable Act authorizing the FCC to impose a “cable cap” are outdated in world of media abundance and vibrant platform competition.
- Because cable is no longer the unique “bottleneck” or “gatekeeper” that it was in 1992, these statutory provisions (not just the FCC’s 30% rule) must be subject to strict scrutiny under the First Amendment as a limitation on free speech.
- Because there are “less restrictive means” of ensuring cable operators do not impede the flow of video programming to consumers, the court should strike down these provisions.
- Even if the court upholds the statute, it should nonetheless strike down the cap issued by the FCC in December 2007 (30% of all Multichannel Video Programming (MVPD) subscribers as based on an outdated model of the video marketplace.
I encourage you to read our brief (below). I’ve provided a summary below, along with some additional commentary we just couldn’t cover under our 3500 word limit.
Strict Scrutiny. Yoo’s article Architectural Censorship and the FCC is essential reading for anyone who believes that government regulations on the size and shape of the “soapbox” can have huge effects on speech itself. Yoo argues that the First Amendment should check this kind of regulation–however “content-neutral” it might seem–under “strict scrutiny”, which requires that the government show that a regulation is the “least restrictive means” available for advancing a “compelling government interest.” But Yoo ultimately concludes (pp. 713-718, PDF pp. 45-50) that, under existing precedent, most “architectural censorship will be effectively insulated from meaningful judicial review.” Continue reading →
So, if Tim Wu’s thesis is correct that the broadband marketplace is “a cartel,” should we be reading headlines in today’s Wall Street Journal and CNET News.com like this: “Price War Erupts For High-Speed Internet Service” and “Broadband Price War Brews“? From the WSJ story:
The battle between cable and phone companies to sign up new customers for high-speed Internet service is heating up, creating fresh opportunities for consumers to cut their bills. [...] While the most generous offers are coming from the phone companies, some analysts expect cable companies will also become more aggressive in their own promotions as they compete to retain customers.
Geez, if that’s a cartel, give me more of them!
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