Monday, December 01, 2014

Incumbent misapprehensions and myths: Time to get real

Fiber fight: Broadening broadband Gig City touted as model in broadband debate | Mobile TFP: In its filing with the FCC, AT&T notes that many municipal broadband networks never got off the drawing board, putting taxpayers are risk, while others have pre-empted private investment.

"Although many government owned networks (GONs) have failed, or at least failed to live up to expectations, GONs can nonetheless discourage private sector investment because of understandable concerns by private sector entities of a non-level playing field," AT&T attorney Christopher Meimann said.

A natural monopoly like telecommunications infrastructure cannot and will not ever be a "level playing field." Whoever is on the field holds a monopoly advantage. Incumbents have used that advantage to pick winners and losers by building Internet telecommunications infrastructure to serve some neighborhoods but not others.

"Any policy that risks diminishing private sector investment would be short-sighted and unwise."

AT&T wants incumbent, private telecom providers to have a "right of first refusal" to deploy high-speed broadband before a government utility starts such a competitive service.

It's entirely appropriate for government to construct telecommunications infrastructure given market forces alone cannot ensure all homes and businesses have access to modern fiber optic telecommunications service. Private sector investment has already been substantially diminished insofar as millions of U.S. premises remain unserved by landline-delivered Internet connections even under current U.S. "light touch" regulatory policy. 

Where service is not available, phone companies and cable providers suggest broadband can be subsidized through the FCC's Connect America Fund, which is targeted at the 18 million Americans living in rural areas with no access to robust broadband infrastructure.

In theory yes. But legacy incumbent telephone and cable companies have largely shunned the Connect America Fund subsidies because they are incompatible with their market segmentation strategies that concentrate their capital investment in high density, metro areas.

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