Saturday, February 20, 2016

Why the "last mile problem" is a national problem

In the United States, telecommunications infrastructure deficiencies tend to be defined as a local or "last mile" problem. Residents of homes, businesses and government buildings have orders for services refused by providers because no infrastructure exists to deliver them. Or the cost of service is exorbitant, offering very poor value.

Since the problem typically manifests in a specific neighborhood or at a particular address, it's naturally seen as local problem. Particularly when premises just down the road, around the block or elsewhere in the neighborhood are offered service, a broader selection of services or service at considerably higher value.

But while the problem manifests locally, it is not fundamentally a local problem nor is it confined to a single area with a local root cause or causes. It's a microeconomic issue that occurs throughout the nation due to a common cause: market failure on the sell side due to incumbent telephone and cable companies deeming a neighborhood, road, street or even address not sufficiently profitable to serve -- even if consumers request service. It's known as redlining.

Local problems with local causes naturally lend themselves to local solutions. However, telecommunications infrastructure market failure and redlining and price gouging are not local in origin. They are the national business policy of the dominant incumbent providers that while not legal under current U.S. Federal Communications Commission rules, nevertheless are a widespread pattern and practice affecting similarly situated consumers. The resulting market failure is a national problem because telecommunications infrastructure is essentially interstate. National problems require national solutions.

1 comment:

InfoStack said...

If people (academics, regulators, trade execs and capital markets) would understand that value naturally gravitates to the core and top of networks, then it is obvious why our edge problem exists. A method of sharing (redistributing) network ecosystem value actually makes the ecosystem more sustainable. We need more work on "inter-network" settlements. The move to bill and keep settlements between networks, copying the balkanizing settlement-free peering model of the internet is a recipe for disaster and growing the digital divide everywhere.

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