What do we mean when we say "competition?"

Tue Nov 15 16:48:00 UTC 2005

>> 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.

Low prices of the monopoly is driving out viable competition.  Once  
competition is gone the prices WILL be raised.
Competition brings innovation of products and services, not just  
lower prices.

> 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.

Yes Verizon/SBC are building FTTH in limited areas.  They are doing  
it with profit from their government granted monopolies and with FCC  
assurances that they will be able to maintain the monopoly on new  
fiber builds.  So, in a sense the government is chartering a FTTH  
build. They just are doing it in such a way as to kill competition  
and eventually hurt the nations economic development.  Short term it  
is a good thing, long term it is economic suicide.

> 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.

Yes, and I have  there are 4 muni fiber builds around me of which I  
am building a PON deployment over 2 of them.  I am a *little* service  
provider,  couple hundred megs of bandwidth,  couple million $/year  
in revenue.  I just picked up/installed my phone switch so now I can  
offer voice/data over the PON.  So, in my small market (Western MA) I  
can provide a competitive service to  Verizon/Comcast in certain muni- 
built fiber networks.  I'm also a CLEC building out COs to provide  
ADSL2+, g.SHDSL service in areas (new products/services).  It is slow  
going because of limited budgets but I'm having a hell of a lot of  
fun while doing it :)

>> 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.

Oh,  you can bet that pricing will be raised.  As a monopoly you use  
your monopoly advantage to squash the competition.  You do this by  
driving the price down.  Once the competition is cleared from the  
market you are free to raise pricing at will.  The only thing that is  
saving us at this point is 'The Act' which is systematically getting  
dismantled by the RBOCs.  My only hope is Congress grows a pair and  
comes out with a sane telecom act in 2006.

>
> 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?

The spirit of The Act maybe but not the implementation.  Congress had  
a good idea, they just left that damn word in there (i.e.  
'impairment') which is what all of the fighting has been about.  As a  
CLEC I am no longer impaired when I don't have access to Verizon dark  
fiber.  So now I have to build my own which required HUGE capital,   
taller telephone poles,  uglier streets....  it is impractical to  
have >1 fiber networks in the markets that I serve (rural, suburban).

>
>>> 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?

Possibly,  but we may never know what new services an ISP can  
innovate if they don't exist anymore. Admittedly I'm biased and as an  
ISP express the view from my edge of the world.  I think my view is  
sane but I'm sure there are others that think it is not.   
Preservation is an important human characteristic.  I have 40ish  
employees that I would like to keep employed.

Don't kid yourself, prices will be raised once competition is driven  
from the market.  I'd rather pay a little more now for long term  
financial/economic viability.

> 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?

Absolutely.     The RBOCs are great at rubber stamping service.  Any  
color you want so long as it is black.   Smaller ISPs are better  
suited to provide unique,individual services.  For example,  we  
provide a small, private DSL network to a local health organization.   
Bundle that network with some colo space and we shaved 80% off their  
telecom budget.  It is only 19 offices but it did keep more money  
available so they can do what they do best.  They also have a better  
network, better workflow, better productivity because of it.  An RBOC  
would never be able to engineer/maintain something as unique as what  
we did.  As a small provider I have a lot of time/energy invested in  
providing a perfect fit solution to my customers needs.  As an RBOC I  
would change my customers needs to fit my perfect mass-produced  
solution.
--
Matthew S. Crocker
Vice President
Crocker Communications, Inc.
Internet Division
PO BOX 710
Greenfield, MA 01302-0710
http://www.crocker.com