Colorado video franchise fight reveals true goal of provider "competition," Comcast's hypocrisy

Here's an interesting story from the Rocky Mountain News that illustrates what the real competition between cable companies and telcos is all about. It's not about which can capture the most customers in a given market -- the traditional measure of market competition -- but rather who can force the other guy to provide service to everyone in a given local government jurisdiction.

Cable provider Comcast insists Denver-based telco Qwest be required to provide broadband video service to everyone in the Colorado municipalities it wants to serve, charging Qwest will leave some neighborhoods unserved if local governments don't require it to do so in exchange for granting Qwest a video franchise. (Note however, hypocritical Comcast does exactly what it accuses Qwest of doing, including in my own El Dorado County, California ZIP code where Comcast serves some neighborhoods but refuses to serve others).

If Colorado local governments force Qwest to serve their entire jurisdictions, the Rocky Mountain News reports Qwest may counter by invoking a recently promulgated Federal Communications Commission rule that Qwest sought prohibiting local governments from imposing "unreasonable" build out requirements on telephone companies seeking franchises to offer enhanced broadband-based video services. The rule also requires local governments to make a decision on a video franchise application within 90 days.

If Qwest presses ahead with this reported effort to accelerate local government video franchise applications, it will set the stage for litigation over the meaning of what constitutes an "unreasonable" build out requirement under the FCC rule. Local governments have already gone to federal court to challenge the rule, contending the FCC overstepped its authority.

Qwest's initiative also marks a quick reversal of a strategy announced earlier this month by CEO Richard Notebaert, who told Bloomberg Qwest planned to hold off offering video over phone lines, concentrating instead on accelerating residential broadband Internet access.

California's AB 2987: Market competition in a tightly limited market

I agree in concept with Pacific Research Institute think tanker and TechNewsWorld columnist Sonia Arrison that allowing telcos to compete with cable companies for broadband video services as California's recently enacted Digital Infrastructure and Video Competition Act (AB 2987) provides is good public policy in that it spurs some degree of market competition. "California lawmakers -- and others across the nation -- would do well to learn from the success of cable franchise reform and discard recycled proposals to over-regulate the technology sector," Arrison opines.

The problem is that competition is geographically restricted, playing out in a limited market where both the telco and cable provider have a presence. Consumers not in these proscribed markets don't benefit from the increased competition envisioned by AB 2987.

In California and most states, there exists a de facto duopoly in which the big telcos and cable companies like AT&T and Comcast have the market all to themselves. There are few if any other competitors nipping at their heels and forcing them to provide more and improved services.

Exhibit A is the large number of broadband black holes that exist in California where hapless residents can't get broadband Internet access from their telco (who in AT&T's case tells them to "go suck a satellite") or from the cable provider (upon whose maps these would be customers simply don't exist). Here, AB 2987 fails to spur competition and better services and does nothing to expand broadband services to unserved areas of the Golden State since the legislation allows the telco/cable duopoly to offer services to just half of potential customers by 2012. That effectively locks the providers into the market they presently serve, creating two separate but unequal Californias -- one with broadband Internet access and the other without.

U.S. Sen. Jay Rockefeller introduces universal broadband resolution

Thanks to Eldo resident Ron Britvich for passing this along this item from ars technica reporting Sen. Jay Rockefeller (D-WV) has introduced a Senate resolution calling for 100Mbps broadband for all U.S. residents by 2015, with an interim goal of 10Mbps by 2010.

Rockefeller noted that at the current pace of deployment, "next-generation" broadband networks (which the resolution defines as being capable of 100Mbps) will not be deployed throughout the US for another 20 years. The resolution calls on Congress to work with the President to develop a strategy with the goal of passing legislation by year end, but since a resolution doesn't carry the force of law, there's no guarantee that it will have any tangible results.

Comcast should expand service area as well as access speeds

Roberts went on to demonstrate how wideband can download four gigabytes of data, the entire Encyclopedia Britannica Library--55 million words and more--in just under four minutes. It would take a traditional cable modem about three hours and a dial-up connection two weeks to download the same amount of data, which Roberts said is equivalent to how much the average family consumes online a month.

“It’s kind of mind boggling to think what you’d be able to do with that speed,” said Roberts.

In the short term, Roberts and his fellow cable operators plan to use that speed to continue to hammer away at the competitive threat from both the telcos and satellite with their triple-play offering of video, broadband and voice services.

Satellite Internet with triple play? What planet is Roberts living on? Satellite Internet is crippled broadband, with sluggish connections and high latency that can't even support Voice Over Internet Protocol (VOIP). As for the telcos, the only real threat is Verizon if it continues to speed deployment of Fiber To The Home (FTTN). If Comcast really wants to compete with the telcos and satellite, it should expand its coverage to those areas where residents are stuck with a Hobson's choice of dial up over aging telco copper cable or satellite.

San Jose Mercury News: Time for action on national broadband policy

The federal government’s lack of leadership in this area is a disgrace. Despite a 2004 promise by President Bush to deliver “universal, affordable access to broadband technology by the year 2007,” his administration has done nothing to advance that goal.

Last month, the Federal Communications Commission, chaired by Bush appointee Kevin Martin, launched yet another study of the sorry state of broadband service in this country.

The U.S. needs action, not another study.

Inadequate telco infrastructure drives cities to build fiber networks

Lafayette's Fiber to the Home project is expected to provide residents and businesses with Internet, cable and telephone services at a low cost.

Salter said cities with fiber networks have experienced economic growth as a result.

"We just think that the ability to move information is where everything is going," he said.

Huval said telecommunications companies have infrastructure with limited capacity.

Fiber will not artificially limit capacity, he said. Residents will be able to choose how they want their fiber.

Satellilte Internet customers condemned to broadband purgatory

Satellite Internet providers serve about 10 percent of the U.S. that is mired in broadband black holes, according to one of them, Hughes Communications. And they believe they'll have a lock on this captive market for the foreseeable, betting the wire line telco/cable duopoly won't ever serve these areas. AT&T reinforces this grim reality, making satellite a key element of its broadband initiatives.

Their customers face a purgatory of sluggish connections slowed by the 46,000 mile round trip from their computers to satellites that they must share with thousands of other customers, unlike the commercial and military users of the technology.

"If you look at this industry ten years from now, there's still a good chance consumers will still be unhappy. And the reason is that satellite bandwidth is extremely expensive," said Randy Scott, manager at VSAT U.S., a Monument, Colo., company that installs satellite dishes for commercial customers. HughesNet is one of the companies he works with.

Broadband franchise legislation or not, AT&T not expected to deploy broadband to Tennessee small towns

AT&T is threatening Tennessee lawmakers that it will not invest in deployment of broadband in smaller towns if the state legislature doesn't pass a state video franchise bill backed by the telco.

A lobbyist for local governments opposing the measure however says even if it were enacted, AT&T would continue to concentrate on large metro areas of the state and leave smaller towns on the dark side of the digital divide.

Which is likely true because similar statewide franchise bills such as California's Digital Infrastructure and Video Competition Act of 2006 (AB 2987) -- which was also sought by AT&T -- requires big providers to deploy broadband to just half of their service areas by 2012, leaving non-urban areas out in the cold.