Keeping politicians' hands off the Net & everything else related to technology
As Adam posted earlier, the FCC decided to not force incumbent companies to share their fiber to the curb networks with competitors. In my oped that appeared in the Washington Times last Sunday, I compare this decision to receiving a green light for speedier traffic. The FCC–the traffic cop of the communications industry–just raised the speed limits on broadband.
The Chicago-based Heartland Institute today released a new study on local government ownership of broadband networks, by Joseph Bast, the president of the Institute. Entitled “Municipally Owned Broadband Networks: A Critical Evaluation,” the paper focuses on the situation in three Chicago area suburbs, but is chock-full facts, figures, and logic that can apply to any city. Definitely a must-read if your friendly local city council members are considering a broadband scheme.
In case you missed it, the FCC released two very important broadband policy orders yesterday, one on broadband over powerline systems and one on “last mile” fiber deployment by telco operators. The thrust of both orders was quite deregulatory or “hands-off” in nature. In response to the fiber freedom order, Bell companies immediately announced plans to deploy more fiber-to-the-curb across America. This is not surprising; if you give companies firm property rights in their own lines and networks, they will deliver more services to customers. If you make them share their systems with all their competitors, they will be slow to innovate and deploy new networks and services to the public. Luckily, FCC regulators are finally learning this lesson.
Communications Daily reports today that the only thing the Republican platform has to say about telecom policy is that “every American [should have] access to affordable broadband by 2007.” Well, that’s nice. I guess I missed that section of the Constitution that granted every human being an inalienable right to high-speed Net connections. Perhaps the new Republicans technology platform should be labeled “Life, liberty, and the right to speedily download porn and P2P music.”
Catherine Yang reports in the current Business Week that America is “Behind in Broadband” and implies that the deregulation of telephone operators is the primary culprit. She argues that “To have any hope of joining the world’s broadband vanguard, the U.S. must create a viable third competitor” to telco and cable providers. But she then suggests that forcing at least the Bells to share the infrastructure with rivals is the primary way of accomplishing this goal in the short term.
How many times and in how many ways must it be said: SHARING IS NOT COMPETING. Infrastructure sharing is not the same as infrastructure creation and innovation. Simply mandating that more “rivals” share someone else’s embedded infrastructure is hardly a sensible way to bring about the additional facilities-based competition America really needs. We don’t ask policymakers by regulatory fiat to create new car companies by forcing Ford to share their facilities with another companies at regulated rates. Instead, we expect companies to build all new facilities to compete and offer us a legitimate choice.
The Justice Department’s Office of the Solicitor General announced today that it would be seeking Supreme Court review of an case with important ramifications for the future of broadband Internet regulation in America. The decision in question, Brand X Internet Services vs. the Federal Communications Commission, was handed down by the Ninth Circuit Court of Appeals late last year.
In the Brand X case, the Ninth Circuit foolishly decided that high-speed Internet services provided by cable companies could be considered a “telecommunications service” and regulated accordingly. In other words, all the silly damn laws that apply to telcos–including misguided infrastructure sharing rules–could be rolled over onto cable operators. Thus, regulators–including state and local regulators–would be allowed to regulate rates and terms of service for nationwide Internet services under the logic of Brand X.
An interesting contrast to Tom Hazlett’s excellent article on Korean broadband (see Adam’s post below), comes from this week’s Economist magazine. “Europe’s coming leader in broadband is France,” the article proclaims, pointing out that French broadband growth was the highest in Europe last year. The piece credits France’s extensive unbundling regime (it has the second-largest number of unbundled loops in Europe). It doesn’t mention however, that France’s penetration rates have been well below most others in Europe, never mind Korea. Despite the Economist’s breathless support of French policy (unusual for this London-based magazine), I still wouldn’t bet on the land of the Minitel becoming the broadband leader anytime soon.
Tom Hazlett has a nice piece on page A12 of the Wall Street Journal today explaining why South Korea is kicking everyone else’s butt when it comes to broadband connectivity and speed. Surprise, surprise, it comes down to their reliance on facilities-based competition instead of regulatory micromanagement. Hazlett notes that “Korea’s policy has proved a smashing success… (because) the government ended regulation of advanced telecom applications. The result: While competitors largely avoided (regulated) voice services, they invested billions to create new (unregulated) high-speed Internet networks. The broadband technologies unleashed by telecom rivals forced (Korea Telecom) to modernize its network, which now serves just half of the high-speed market.”
As a result, 78 percent of Koreans now have broadband access, the highest penetration rate in the world and double that of the U.S.
The bottom line: “forced access” infrastructure sharing regulation cannot deliver the goods. Only true, facilities-based competition, brought on by comprehensive market liberalization, will bring about the investment and innovation this country so desperately needs. John Wohlstetter of the Discovery Institute has come to the same conclusion in a recent piece.
Here in the U.S. we’re bogged down in determining whether the Communication Assistance for Law Enforcement Act (CALEA) applies to VoIP technology (the FCC unanimously ruled that it does, but a federal court will likely have the final word). In Canada, they’re debating who should pay for wiretapping. The Canadian Association of Chiefs of Police says it should be telephone users.
An article in the Halifax Herald reports that Canadian police want a surcharge of 25 cents on monthly telephone and internet bills. This charge would cover the costs of tapping into communications networks of suspected terrorists and criminals.
At first glance, it doesn’t seem like such a big deal. We already have a federal security surcharge of up to $10 per airline flight (aka the September 11 Security Fee) which serves to fund air travel safety, why not a similar charge on users of communications services to help law enforcement get the bad guys? But there are important differences here. While it may indeed be efficient to place the costs of safety on the user of the service, wiretapping laws do not make telephone users themselves safer – instead, it’s the greater society that purportedly benefits. So this proposal is a tax, not a “user fee.” Economists will tell you that it is inefficient and costly to administer and collect lots of little taxes.
To be sure, taxpayers will pay through general taxes if telephone users do not. But check out this fantastic comment by a Canadian police officer:
“From our perspective, it’s a slippery slope to start paying for the execution of search warrants or any kind of court order.”
Let me get this straight. It’s a burden for your agency to use its own funds for its own activities…to do your job? Should there be a special tax levied on light bulb purchasers for red and blue lights on patrol cars or for consumers of two-way radios so that police forces can upgrade their communications networks?
This is just another example of unfairly burdening a technology. If this proposal gets traction in Canada, it may migrate south to our country (with all the phone taxes already on our bills, who would notice?).
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.
