News

Competition, Not Neutrality, Is Key

5/03/2010 12:01 AM Eastern

A recent court decision
ruled (with caveats) that the Federal
Communications Commission
did not have the authority
over the cable companies’ Internet
service provisioning, and
the complications known as net
neutrality (NN), such as blocking
or in some way limiting a customer’s
service. Unfortunately,
NN is simply a failure of a market
without adequate competition.

Our focus has been dragged
away from the real issue, the infrastructure.
There are phone and
cable wired in homes and businesses,
etc. Those wires should allow
someone to pick and choose
the services over that wire, and
if their Internet or broadband
provider blocks or degrade their
service, the customer can find another
provider. Instead, there are
only two providers in most markets
with the same collusive conditions
— block all competition.
You can’t go elsewhere.

Thus, even if the net-neutrality
issue was “cured” by the FCC,
the problems are much deeper
and they would still continue to
plague America’s broadband,
Internet and phone customers.

The underlying problem is that
the phone and cable companies
have taken control of America’s
critical infrastructure . And under
their control over the last 25 years,
they’ve failed to adequately upgrade
the infrastructure. America
is now 15th in the world in broadband,
and now every plan is about
“workarounds” of the incumbents
or filling ”deployment” holes left
from the companies’ incompetence
— or, more realistically,
greed — over public interest.

And it wasn’t because AT&T,
Verizon Communications, et. al.
didn’t receive financial incentives.
The phone companies made massive
commitments to rewire entire
states, schools, libraries, etc.,
and received billions per state to
do these upgrades — yet, the work
was never done. We estimate the
companies already received $320
billion and counting, as the companies
continue to get phone rate
increases to pay for fiber optics
and other services.

Not only was the money to be
used to upgrade the states’ utilities,
the Public Switched Telephone
Networks (PSTN), pocketed
by the companies, but just to show
you how sleight-of-hand this
“broadband network” discussion
goes, AT&T is now claiming
that there are really two different
networks — the old PSTN and the
new shiny “broadband network.”

In fact, AT&T has filed with
the FCC to start to close down
the PSTN. It claims it is a drain
on broadband investment.

It’s absurd on its face because
there is really only one phone
network — the PSTN , or state
utilities — and we at the New
Networks Institute believe it has
been hijacked illegally. It was the
utilities that were supposed to be
upgraded to fi ber optics. It was
the utilities that were opened to
all forms of competition by the
Telecom Act and state laws and
it is the utilities that are currently
funding Verizon and AT&T’s
new networks in the form of increasing
phone rates.

And yet, over 25 years, there’s
been a total failure to properly
upgrade these utilities. The
failure is clear; we’re 15th in
the world in broadband for a
reason — and after 25 years of
AT&T and Verizon’s rule, we sit
here today and are bickering
about net neutrality.

Opening the networks in a
traditional way will not solve
the current problems. While the
break up of AT&T in 1984 was to
open the long distance markets,
the Telecom Act of 1996 was supposed
to open the “last” mile —
opening up the PSTN to local
competition, Internet competition,
in fact, even video competition.
And while the Telecom Act
giveth, under pressure from the
phone companies, these networks
were closed. But, the “era of competition”
proved that the phone
companies would do everything
in their power to keep controls over
their wires, so simply reopening
the networks will not bring robust
and sustainable competition.

Maybe it’s time to give AT&T
what it wants — AT&T, Verizon,
you keep the “broadband networks,”
and we’ll keep and properly
finally upgrade the PSTN to what
was already paid for — fiber optic,
very fast, reasonably priced, ubiquitous,
open-to-all networks .


Bruce Kushnick is executive director
of the New Networks Institute.
March