Advocates of municipal broadband face resistance over high-speed access | GazetteNet.com

Advocates of municipal broadband face resistance over high-speed access | GazetteNet.com: Foes, including private Internet service providers such as Comcast, AT&T and Time Warner Cable, have a different view. They say they are spending hundreds of millions of dollars upgrading infrastructure to give high-speed access to every American, and that government shouldn’t compete against private companies, which must pay taxes and make a profit.

The assertion regarding "upgrading infrastructure to give high-speed access to every American" is a false statement. These providers segment their markets and redline neighborhoods deemed less profitable and have no plans to serve them, all the while making promises they cannot stand behind. The reason they cannot is they are constrained by inpatient shareholder investment capital and short term business models inappropriate for high cost capital infrastructure that can require decades to produce a return on investment.

The claim that government is unfairly competing with private sector telecommunications providers is also false in a strict economic sense. Competitive markets are characterized by many buyers and sellers. In telecommunications infrastructure, there are many buyers and users but few sellers, making the market a natural monopoly or duopoly. When the public sector steps in to build and/or finance telecommunications infrastructure, it does so because this market environment combined with the previously mentioned business model limitations of investor-owned telephone and cable companies produces market failure on the sell side. That failure has left millions of Americans unable to order modern Internet landline-delivered services at their homes and small businesses.

Latta ascribes wrong cause to constrained investment in last mile infrastructure

Rep. Bob Latta Weighs in on STELA, Title II & E-Rate | USTelecom: On the topic of Title II, net neutrality and broadband legislation, Latta said, “First of all, I believe in an open Internet — a free Internet without government intervention. When you look at where the Internet has come and where it’s going in the future, this has all been done on the private sector. It’s not been done because of what the Federal government has done.” According to Latta, by putting broadband under Title II to make it more like telecommunications using a law from 1935, “What we will see happen then is that the innovation out there that’s spurred about a trillion dollars in private investment is all of a sudden going to be tied up like it would be with a telephone company. We don’t want that. Because once you start that up, then all of a sudden innovation is going to slow up — not only innovation — the dollars put in it and the tens of thousands of jobs being created. So we don’t want that to happen. We want to make sure that it remains free, it stays open and it stays away from government control.”

The problem with this position is regulation isn't the cause of what the Federal Communications Commission estimates as nearly 20 million Americans who are not offered landline Internet connections to their homes. In addition, much of the nation remains served by outdated twisted pair copper plant built many decades ago for analog telephone service and not fiber to the premise needed today and in the future as bandwidth demand grows dramatically.

If legacy telephone and cable companies had innovative solutions to build that necessary infrastructure, they would have pursued them over the past two decades. They haven't been able to do so not because of regulatory burdens but rather market failure on the sell side. It's because their business models are oriented to gaining a return on infrastructure capital investment over time frames far shorter than what's needed given the high costs -- mostly labor -- of deploying that infrastructure. It is this economic consideration that stifles investment in last mile Internet infrastructure in the United States, not regulation.

Roanoke Valley Broadband Authority, Internet providers disagree on state of broadband - Roanoke Times: Roanoke News

Roanoke Valley Broadband Authority, Internet providers disagree on state of broadband - Roanoke Times: Roanoke News

This story illustrates that local government officials are growing less inclined to rely on what incumbent legacy telephone and cable companies claim they have in place or will build when it comes to last mile Internet infrastructure.

Good for them. Other local governments should follow this example and create and fund special districts and authorities to build the infrastructure they need. Collectively, their doing so will help the United States bridge a persistent Internet infrastructure gap that leaves millions of Americans without adequate connectivity -- many of them still forced to use dialup connections that were state of the art 20 years ago.

Study finds Missoula city, county should spend $10M on broadband

Study finds Missoula city, county should spend $10M on broadband: As proposed, the city and county together would invest $10 million toward a $17 million system, with the local government funds leveraging other money, Copple said. The local money would be paid through user fees, not taxes, and it would build roughly 60 miles of an “open access” fiber-optic network.

“Everybody has the same chance to use it,” Copple said.

Open access fiber telecom infrastructure funded in West Virginia over telco's objections

Competition in telecommunications infrastructure isn't really among major telcos and cable companies. They operate in market that due to the high cost barriers to entry functions as a natural monopoly or at best, a duopoly where service is available from just two landline providers: the phone company or the cable company. In much of the United States, the choice is only one of the two or sadly, neither because they have redlined parts of their service territories.

The real competition is between the business models for premise Internet connectivity: open access Internet infrastructure such as employed by the Utah Telecommunication Open Infrastructure Agency that regards it as a public asset like roads and highways or the proprietary, closed access infrastructure model of investor-owned telephone and cable companies.

This week in West Virginia, the debate tipped in favor of open access after the West Virginia Broadband Deployment Council voted 3-2 to provide $690,000 in funding to the West Virginia Network, a state agency that provides Internet service to schools, universities and other public facilities. The deciding factor was the state wanting more control over the infrastructure and not being subject to the whims of a monopoly provider.

“Frontier is the only provider in the region, and there is no open access to that infrastructure,” one of the council members noted. “You can’t really connect any of the dots [communities] together . . . . We can hopefully connect those rings and enable broadband expansion in the area.”

This is a notable development because it signals that public policy is shifting towards viewing Internet infrastructure as essential as public thoroughfares and thus not best controlled and operated as a hodge podge of private toll roads with high tolls and serving only some areas while leaving others disconnected from the Internet.

Click here for the story.

West Virginia Broadband Deployment Council voted 3-2 to award the money to West Virginia Network, or WVNET, a state agency that provides Internet service to schools, universities and other public facilities. WVNET would own the three-segment fiber network that would connect Snowshoe to Cass, Valley Head to Mill Creek, and Durbin to Green Bank. - See more at: http://www.wvgazette.com/article/20140723/GZ01/140729675/1419#sthash.ldOg1t7a.dpuf

West Virginia Broadband Deployment Council voted 3-2 to award the money to West Virginia Network, or WVNET, a state agency that provides Internet service to schools, universities and other public facilities. WVNET would own the three-segment fiber network that would connect Snowshoe to Cass, Valley Head to Mill Creek, and Durbin to Green Bank. - See more at: http://www.wvgazette.com/article/20140723/GZ01/140729675/1419#sthash.ldOg1t7a.dpuf

West Virginia Broadband Deployment Council voted 3-2 to award the money to West Virginia Network, or WVNET, a state agency that provides Internet service to schools, universities and other public facilities. WVNET would own the three-segment fiber network that would connect Snowshoe to Cass, Valley Head to Mill Creek, and Durbin to Green Bank. - See more at: http://www.wvgazette.com/article/20140723/GZ01/140729675/1419#sthash.ldOg1t7a.dpuf

West Virginia Broadband Deployment Council voted 3-2 to award the money to West Virginia Network, or WVNET, a state agency that provides Internet service to schools, universities and other public facilities. WVNET would own the three-segment fiber network that would connect Snowshoe to Cass, Valley Head to Mill Creek, and Durbin to Green Bank. - See more at: http://www.wvgazette.com/article/20140723/GZ01/140729675/1419#sthash.ldOg1t7a.dpuf

The FCC wants to let cities build their own broadband. House Republicans disagree. - Vox

The FCC wants to let cities build their own broadband. House Republicans disagree. - Vox

House Republicans would be well advised to consult with or hire new, better economic advisors. They demonstrate a fundamental misapprehension of telecommunications infrastructure in viewing it as a competitive market when in fact it's a natural monopoly as Susan Crawford notes (see the embedded video interview).

Competitive markets (like retail grocery and furniture, for example) have many sellers and many buyers. Due to high cost barriers to entry, telecommunications infrastructure is not characterized by a multitude of sellers and will likely never be a competitive market. It's a utility like telephone service as Crawford correctly observes, and should be regulated accordingly.