Broadband

The Wall Street Journal this morning updates the evolving story of how bandwidth pricing might change as more content and applications move from the traditional phone and cable TV networks onto the Net. The phone companies envision a system whereby Internet companies would agree to pay a fee for their content to receive priority treatment as it moves across increasingly crowded networks. Those that don’t pay the fee would find their transactions with Internet users — for games, movies and software downloads, for example — moving across networks at the normal but comparatively slower pace. Consumers could benefit through faster access to content from companies that agree to pay the fees. The size and structure of the fee systems remain Read More ›

A revised staff draft is circulating in the House Energy & Commerce Committee. The proposal is more deregulatory in several important respects and marks solid progress in the effort to promote investment and foster innovation. For example: Although competitors would still be required to file registration statements with the FCC, the agency is given far less latitude to pervert the requirement in order to limit or condition entry. Immediate access to public rights-of-way and compatible easements is guaranteed for Broadband Video Services (BVS) and, now, for Broadband Internet transmission services, as well. The definition of BVS has been simplified. The first draft contained a definition intended to push technology in a particular direction. That definition was reminiscent of the “Open Read More ›

Should it be illegal to offer a discount to a customer who wants to buy a bundled product? According to Reuters, six firms allege that Qualcomm is stifling competition in the mobile phone chip market by offering preferential terms on patent royalties to manufacturers who also buy Qualcomm’s chipsets. The six firms have filed a complaint with the European Union’s antitrust regulators, who are sympathetic to any argument that competition is a bad thing when undertaken by a large company. The report makes no mention of whether the preferential terms are alleged to be predatory, or whether the bundling constitutes tying. The question is whether the complaint is just an attack on legitimate economies of scope and scale.

EarthLink announced it has been awarded an “exclusive franchise” by Anaheim, Calif. to build a citywide Wi-Fi broadband network. Hmmm. 47 U.S.C. § 253(a) says: “No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.”

City officials in Ashland, Oreg. have delayed their plans to raise electricity rates by $7.50 per month to cover the unexpected cost of their municipal fiber network. Meanwhile, the local newspaper calculates the problem could be solved if 90% of the customers of Charter Communications switch over to the municipal network and “accept steep price increases to top market rates.” They might as well outlaw private enterprise while they’re at it.

Often lost in the public policy debate on municipal telecom networks is any halfway serious discussion of technology, and thus of economics. Yes, I know that Wi-Fi wireless access has been upgraded to a “fundamental right” in San Francisco even as the Supreme Court says mere property rights have now been Constitutionally downgraded. But beyond these silly new assertions by politicians and judges, what does the technology tell us about where broadband access in general and wireless access in particular are headed? Helping to answer these questions is a Qualcomm marketing executive named Jeff Belk. Several years ago, Jeff penned a series of popular riffs and white papers chronicling his experiences with Wi-Fi hotspots. Wi-Fi is great, he insisted, for Read More ›

What happens when a municipal broadband network fails to cover its costs? The costs get shifted. Residents of Ashland, Oregon will see a monthly surcharge of $7.50 on their electricity bills. Ashland’s cable rate payers will also get hit with a surcharge. (See the article from the Ashland Daily Tidings.) The fact that Ashland’s fiber network is not profitable, that Ashland cross-subsidizes it and that Ashland’s taxpayers/captive rate payers will foot the bill for a bailout proves what many of us have been saying about municipal networks: (1) Cities lack the expertise to successfully build and operate broadband networks, (2) Cities will discriminate in favor of their own network ventures and (3) Cities are unprepared to continually modernize the networks Read More ›

The reaction to the draft broadband proposal in the House reminds me of the horror and/or ridicule that greeted each one of the many drafts of what became the Telecommunications Act of 1996. A proposal that is designed to hopefully have a chance of being enacted is always a disappointment (see House telecom proposal opens new frontiers for regulation). Its also not a bad indication where the process would ultimately lead if nothing is done to educate the public about the benefits of deregulation. The problem is a lack of faith in free markets and a skepticism that deregulation works. Even supporters of deregulation fret over whether there is a right way and a wrong way to do it — Read More ›

Philadelphia’s city-run Wi-Fi project seems to be in trouble before it begins. Mike Langberg of the San Jose Mercury News says the city is realizing initial cost projections were way too low and expections were way too high. I said a year ago the $10 million cost figure was “implausible” and that the number of required network nodes would explode from the original projection of 1,000. PFF also questioned Philly’s plan and recaps the story here. I may have been wrong, however, to suggest last year that Philly’s project wouldn’t fail: “I doubt any municipal wireless project has failed, or ever will,” I wrote. “Have you ever heard of a government program that failed? This is the fundamental failure of Read More ›

Telecom merger opponent ACTel trumpeted the results of a survey it commissioned of telecom managers at Fortune 1000 companies who are customers of AT&T or MCI. ACTel claims its survey shows that roughly two thirds of the managers express concern about the mergers. The timing of the survey suggests that that the merger approval process is entering a critical phase. For ACTel and a few others, the mergers are an opportunity to: (1) Force SBC-AT&T and Verizon-MCI to divest valuable network assets and enterprise accounts at bargain basement prices and (2) Roll back some of the recent efforts by the FCC to reduce harmful regulation. AT&T and MCI largely abandoned their efforts to compete in the mass market, so the Read More ›