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Re: What do we mean when we say "competition?"

  • From: David Barak
  • Date: Tue Nov 15 10:45:17 2005
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--- Matthew Crocker <matthew@crocker.com> wrote:

> That is the exact problem with a [mon|du]opoly.  The
> incumbents drive  
> the price so low (because they own the network) that
> it drives out an  
> potential competition.

So you're complaining that the problem with lack of
competition is that the prices are too LOW?  As a
consumer, I'm thrilled with low price, and would only
change providers for a well-defined benefit or a lower
price.  

> 
> We don't need 8 fiber networks overlaid to every
> home in the US to  
> provide competition.  We need a single high quality
> wholesale only  
> fiber network which is open to use by all carriers. 
> I don't want  
> 200' telephone poles down my street with 10 rows of
> fiber. It doesn't  
> make sense.

So should the government charter such a build?  My
understanding is that Verizon and SBC (maybe others,
but I don't know about them) are currently working on
doing a FTTH build at this time.  Presumably, as
they're private companies doing it, they'd like to be
able to be the ones that obtain the primary benefit. 
Do you think that a municipal build/new monopoly build
as you describe would be cheaper or better than what
SBC or Verizon are doing?  If so, you should be able
to convince some cities of the math.

> Again, because of the monopoly held by the
> incumbents keeping the  
> price low enough that you can't afford to build your
> own infrastructure.

This is such an astounding comment that it needed to
be singled out: most of the complaints about
monopolies are that they artifically RAISE prices.  

> 
> We don't need competition in the infrastructure
> business, we need  
> competition in the bandwidth business.  That can
> only happen if the  
> infrastructure is regulated, open and wholesale
> only.   The RBOCs  
> should be split up into a wholesale *only* division
> (owns the poles,  
> wires, buildings,switches) and a services *retail*
> division (owns the  
> dialtone, bandwidth, customers ).   The wholesale
> division should  
> sell service to the retail division at a regulated
> TELRIC based price  
> which will allow the wholesale division to make
> enough money to build/ 
> maintain the best infrastructure in the world.  Any
> competitive  
> service provider can buy the same services at the
> same price as RBOC  
> Retail.  Regulated such that wholesale profit can't
> subsidize retail  
> services.  In high density areas there may be
> alternate  
> infrastructure providers that can sell to CSPs and
> in rural america  
> there will be one infrastructure provider and many
> CSPs

Aren't you pretty much describing the '96 telecom act?
 The result has been the glut of inter-city fiber, and
a dearth of advanced access services at the
rural/suburban edge.   Saying "we don't need
competition in infrastructure, only in bandwidth"
ignores the fact that infrastructure upgrades are
required to support increased bandwidth.  In addition,
why treat L0/1 infrastructure in a different way than
L2/3 infrastructure?

> > This IS the market at work.  If you want it to be
> > different, what you want is more, not less
> regulation.
> >  That may or may not be a good thing, but let's
> just
> > be very clear about it.
> 
> More regulation of the physical infrastructure (the
> expensive piece)  
> and less regulation of the bits to foster
> competitive solutions and  
> bring along new innovations.   The future
> innovations are not going  
> to revolve around new types of fiber.  They will
> revolve around what  
> can be done with high bandwidth to everyone.

First, I wouldn't be so sure to rule out new
improvements in fiber or other physical transmission
media as important - as an example, I think the
widespread adoption of 802.11 has been part of a huge
shift in the way people use the Internet.  That said,
I agree that the biggest innovations are likely to be
applications, not media.  

So let me take the devil's advocate position: why
should prices be raised so that multiple ISPs can get
a layer-2/3 connection to customers without having
their own layer-1 infrastructure?   Is there some
service which is provided which wouldn't be
cheaper/simpler to mandate that the incumbent provide?
 The content providers and innovators you mention
should be able to work with the customers of any ISP,
right?  

I guess what I'm saying is that "competition" is a
virtue only when it leads to either improved or
cheaper service.  Do you think that there are
improvements to service that alternative providers
could make which justify the cost of the regulation
you describe?



David Barak
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