Wednesday, May 06, 2015

Tom Wheeler tells cable industry to stop complaining, start competing | Ars Technica

Tom Wheeler tells cable industry to stop complaining, start competing | Ars Technica: Part of looking forward, in Wheeler's opinion, is boosting competition. With some exceptions, cable companies have generally not competed against each other, letting a single company dominate each region instead of "overbuilding" in each other's territory.

"You don't have a lot of competition, especially at the higher speeds that are increasingly important to the consumer of online video," Wheeler said. This means there isn't the kind of "intense and constant pressure to continue to improve" as there was in the days when DSL posed a serious threat to cable, he said.
The thing is, Mr. Chairman, telecommunications infrastructure doesn't easily lend itself to competition due to the high costs to build and maintain it. It functions as a natural monopoly like roads and highways and electrical distribution infrastructure. We don't build competing thoroughfares to offer motorists the choice of taking Highway "A" and "B" and "C," for example from the same starting point to the same destination. Or multiple power lines serving the same property. Having multiple landline Internet connections passing by premises is similarly overkill and economically wasteful. Just ask any of the legacy phone companies who feel compelled to issue news releases announcing "gigabit fiber" to compete with Google Fiber. It's a helluva lot cheaper to issue a news release than to actually overbuild competing infrastructure and doesn't risk the ire of shareholders averse to big capital expenditures.

The competition Wheeler's FCC and the federal government should be supporting is helping fund the planning and construction of open access fiber to the premise telecommunications infrastructure over which Internet Service Providers would compete to sell services to customer premises. This would also potentially provide greater opportunity for new services than could be offered over a vertically integrated cable provider that owns both the pipe and the services offered over it.

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