Thursday, January 10, 2013

Internet co-creator says U.S. broadband competition has ‘evaporated’ - Yahoo! News

Internet co-creator says U.S. broadband competition has ‘evaporated’ - Yahoo! News: Cerf didn’t offer any concrete suggestions for ways to make the American broadband market more competitive, but generally dismissed the idea that deregulating broadband services would magically lead to more options and lower prices for consumers.

Mr. Cerf's dearth of suggestions to increase competition is because there are none as long as he's talking about investor-owned telecommunications infrastructure competition.  What's needed to end years of these continuing lamentations by Cerf and others is publicly- or consumer-owned open access fiber to the premise infrastructure where service providers pay for network access and compete for customers.  As Andrew Cohill aptly put it a few years ago, the current investor-owned model is broken because it's about as economically inefficient and nonsensical as having package delivery predicated on Federal Express or UPS to first have to invest in building private roads so their delivery trucks can reach customers.

1 comment:

InfoStack said...

Fred, 1st, the internet happened because because we broke up AT&T in 1983 AND we developed ARPAnet in the 1970s. The latter was a technology arbitrage around high-priced WAN connections. The breakup not only brought the WAN costs down 99% making distributed router networks far more cost effective, but the RBOCs responded to the competitive WAN threat in the mid to late 1980s by going to flat-rate, all you can eat local pricing. Then came layers 3-5 (www, http, html, browser) in 1989-1994 and the rest is history.

Second, the author you cite confuses stock with flow. How can he call bandwidth pipes buckets? The rate of flow is different from the stock amount of consumption. Ultimately, pricing needs to reflect marginal cost and the latter is dependent a priori on both supply and demand assumptions. The most expensive minute is the unsold minute. There's a flaw in his thinking.

Lastly, competition was never given a chance, as we started killing it in 1996. Furthermore, the competitive model (vertical) was flawed. The new approach (horizontal) will work. And there is no reason there can't be multiple competitive lower layer companies in each area.

Web Analytics