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Re: What do we mean when we say "competition?" (was: Re: [Latestdraft of Internet regulation bill])

  • From: Owen DeLong
  • Date: Tue Nov 15 21:09:32 2005



--On November 15, 2005 6:28:21 AM -0800 David Barak <thegameiam@yahoo.com> wrote:



--- Owen DeLong <owen@delong.com> wrote:
True
competition requires the ability
for multiple providers to enter into the market,
including the creation
of new providers to seize opportunities being
ignored by the existing ones.
Technically, lots of other providers CAN enter the
market - it's just very expensive to do so.  If there
are customers who are not receiving service from one
of the incumbent providers, a third party is certainly
welcome to {dig a trench | build wireless towers | buy
lots of well-trained pigeons for RFC 1419 access} and
offer the services to the ignored customers.

The problem is that the capital expenditures required
in doing so are very, very high, and most companies
don't see the profit in doing so.

OK... Let me try this again... True competition requires
that it be PRACTICAL for multiple providers to enter the
market, including the creation of new providers to seize
opportunities being ignored by the existing ones.

If two companies can act as gatekeeper for the
entire market in a given
area, that is not an environment where market forces
carry much meaning.
Actually, here's where I'd disagree: market forces are
exactly the thing which is keeping other providers
OUT.  It's too expensive for them to buy their way
into these areas, and during all of the time when
access was mandated to be (relatively) cheap by law,
very few third parties actually built their own
infrastructure all the way to homes.  There are some
competitive cable plants in some cities (I remember
Starpower/RCN doing this in DC), but I'm not aware of
any residential phone providers who built all the way
out to houses exclusively on their own infrastructure.

No... Actually, the lack of market forces in the beginning
is what allows the incumbent providers to have an advantage.
The incumbent providers received huge subsidies from the
government to build the existing infrastructure, and, continue
to receive said subsidies (universal service).  New providers,
OTOH, are being forced to build parallel infrastructure
and collect USF taxes while not receiving USF subsidies.
In some cases, rather than build parallel infrastructure,
they have the option of leasing infrastructure from
the incumbent providers, but, that has it's other lack-of-
market force problems.

If it were equally expensive for the existing providers and
the new providers, there would be no lack of competition.
The fact that the existing providers have an economic
advantage as a result of subsidies is not a market force,
it is the lack of a level playing field preventing
market forces from acting.

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.

Nope... What I want is LESS subsidy to incumbents and
a recognition that infrastructure built with public funds
belongs to the public.  Said infrastructure should be equally
open to all service providers on equal terms, regardless
of who holds the contract to maintain it.

Imagine instead of today's scenarios, an environment where
SBC didn't think they OWNed the pipes, but, instead, the
city's owned the copper in the street and contracted with
<entity that doesn't sell direct end-services> to maintain said
infrastructure for the city.  Then, all RBOCs/ILECs/CLECs
paid the same price to the City through said entity for
the same services, whether dry copper connection, dark
fiber, OC-X, etc.  The city would have a term to the contract
and would put it up for rebid periodically.

That would be market forces at work and not MORE regulation.

What we have today is an attempt to reduce regulation without
recognizing the need to correct the damage already done
by regulation.

Owen



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