Tuesday, August 26, 2014

Unpacking claims of “unfair competition” when the public sector finances or builds fiber to the premise infrastructure

Incumbent telephone and cable companies often cry “unfair competition” when the public sector invests in or builds fiber to the premise (FTTP) infrastructure. Let’s unpack that assertion. From the point of view of these companies, anyone who builds infrastructure they don’t own is a competitor. They really don’t compete to gain customers in a given geographical area. That’s because telecommunications infrastructure isn’t truly a competitive market characterized by many sellers and buyers. Rather than competing for customers, the incumbents’ true interest is in protecting their monopoly or duopoly status.
True competition occurs in a market where buyers and sellers are on a level playing field and buyers have relatively equal access to market players and information on their services, benefits, prices and value offered. That doesn’t happen in telecommunications infrastructure. Incumbents have the upper hand in deciding which neighborhoods they will serve, what services will be offered and at what price. And they don’t disclose where they plan to build FTTP infrastructure.

The public sector typically gets involved in investing in or building FTTP infrastructure not to compete with the incumbents, but to remedy the market failure they create given their power to pick winners and losers among the neighborhoods they opt to serve and those they choose to redline and not offer service.

Finally, since the public sector typically invests in open access infrastructure and provides wholesale access to Internet service providers (including the incumbents), that’s also not direct market competition with incumbent telephone and cable companies. It’s an entirely different playing field and certainly not the same one used by the incumbents who won’t play ball unless they own the field. Hence, there’s no direct competition, fair or unfair.

No comments:

Web Analytics