Category Archives: Internet

Broadband & Title II

The core problem at the center of today’s broadband debate: laying down fiber, or even hybrid fiber/coax or 75Mbps DSL, to everyone’s house is extremely capital intensive. It leads to mono/duopoly conditions because the more competitors in the market equals more ways you split revenue pie equals marginal investment is less attractive.

So what do we do? We can heavily regulate these monopolies/duopoly (Title II) but that doesn’t fix the lack of competition. Prices will still be high because you only have one or two companies providing “Broadband” (25/3) in a given geographical area. There is no incentive to price compete when there will never be new entrants & no substitute products (wireless broadband wont cut it). So we’ll be stuck with high priced broadband that doesn’t block Netflix, that’s OK for now, but doesn’t address long term competitive issues.

We could let local PUC/Corporation Commissions regulate price for broadband, same way they do investor-owned utilities. But lets step back and look at this from a least-regulation position. Mono/duopolies shouldn’t be allowed to do whatever they want. So lets try and get rid of the fact they’re monopolies in the first place.

How do we increase competition? Government can’t force laborers to work cheaper to install the fiber, nor can they make the materials cheaper, so capital costs remain high. If we force companies like Comcast or Verizon (I-ISPs) to open up their lines to competitors (C-ISPs), it will never be an even field. Comcast or Verizon will always slant things to benefit them, in pricing or response time to fix issues, and run C-ISPs out of business. You think Comcast treats their own customers bad now? Imagine being a customer of a C-ISP using Comcast’s pipes.

We need a company to lay fiber that will resell transport but not compete with its customers (the C-ISPs). A municipal agency (govt) that owns the fiber and maintains it would be a good option. Better than your city/county maintaining roads because its a dedicated agency and the money coming in from the C-ISPs stays in the agency for upgrades and improvements (the digital highway trust fund cannot be raided to pay for other things). Limited scope by govt charter, regulated by the state to prevent scope creep. One mission, one goal of building 21st century roads. The agency has a fee structure for (flat + per Mbit + per Mbit/sec) companies who want to sell access. Companies are free to add value (alarm systems, television, phone, etc.). The net neutrality issues go away because of the high degree of competition – if company A slows down Netflix, switch to B, C, D or E.

If we put this plan in motion, existing ISPs try to run other companies out of business. We need regulatory help to prevent that. The optics get difficult, “XXXX is responsible for your higher bills!” they’ll say, but ultimately its to prevent anti-competitive behavior by the large incumbents. Without it, incumbents will wage a price war longer than the government and the competitive ISPs can sustain, which would spell doom for the entire program.

CenturyLink’s Gigabit Service is a PR move, not a solution

Initially announced in October 2013, Centurylink Las Vegas announced they were bringing Gigabit internet speeds to the Las Vegas area (FTTP, or fiber to the premises). All the politicians were happy to announce what a great thing it was for our city to make us part of the “21st Century”.

The problem though, is that its simply “Fiber to the Press Release“, a token effort designed to keep competitors away (like Google Fiber or a municipal fiber effort). The problem is that there are no build-out deadlines, rather they’re simply upgrading their infrastructure to the richest, most profitable customers, further enhancing the digital divide between the haves and have-nots.

Centurylink has announced approximately 40 subdivisions (about 20 initially in December 2013, and 20 more in spring 2014, plus a recent announcement of availability to select businesses) that will be enhanced with FTTP, which is approximately 5,000 single-family homes using a generous estimate of 125 homes per subdivision. At this rate of 5,000 single family homes per year, it will take CenturyLink 80-100 years to provide fiber to the home for all 400,000 to 500,000 single-family homes in southern Nevada, and thats even making the assumption that all new subdivisions built moving forward are built with FTTP.

There is no reasonable mind that thinks 80-100 years is an acceptable time frame to wire up a city with Gigabit Internet. The politicians or the PUC of Nevada need to force Centurylink to move faster in wiring up homes with gigabit speeds.