Thursday, March 03, 2016

Susan Crawford's Rx for ailing U.S. telecom infrastructure

Susan Crawford has added another component to her prescription to cure America's ailing telecom infrastructure, modernizing it with fiber optic technology to replace the increasingly obsolete metallic cables the legacy telephone and cable monopolies use to connect homes and businesses.

In January, she proposed the financial element: harnessing private investment capital via a regionally administered federal telecom infrastructure development and finance agency, funded by federally subsidized bond proceeds. (See related blog post)

Google Fiber's recent move to use existing fiber infrastructure owned by local governments in those select areas it will offer services spurred Crawford to elaborate on the infrastructure component of her solution. Her proposed federal telecom infrastructure development and finance agency would help local governments build open access fiber networks and sell access to retail providers on a wholesale basis.

Crawford sees Google Fiber's willingness to sell retail services over municipal infrastructure it does not own as a game changing move because the business model of local government-owned open access networks like Utah's Utah Telecommunication Open Infrastructure Agency (UTOPIA) have historically not meshed with the vertically integrated, monopolistic business models of the legacy telephone and cable companies that shun open access infrastructure. That model is based on owning the customer and selling monthly subscriptions to one premise at a time. That makes it highly risk averse since these legacy providers target their infrastructure only where they can get the most subscriptions and redline other neighborhoods that aren't as promising, creating widespread market failure and access disparities.

Google Fiber had initially followed the same model in its proprietary infrastructure projects such as in Kansas City and Austin, Texas. Now it is saying if a local government like Huntsville, Alabama has the resources to build fiber to the premise to serve its residents, it will be happy to sell services on that network. Crawford's federal bond finance model could scale up open access networks nationwide by aiding localities that lack Huntsville's pre-existing municipal electric company infrastructure to build their own.

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