What do we mean when we say "competition?"

Wed Nov 16 06:32:23 UTC 2005

--On November 15, 2005 11:23:50 PM -0500 Sean Donelan <sean at donelan.com> 
wrote:

> On Tue, 15 Nov 2005, Owen DeLong wrote:
>> I think what is really represented there is that because
>> they own an existing network that was built with public
>> subsidy and future entrants have no such access to public
>> subsidy to build their own network,
>
> Some people may think "public subsidy" implies using taxpayer funds such
> as giving incentivies to companies to build factories, job training
> programs, re-locate corporate headquarters or even build sports
> stadiums.
>
> Are you refering to the exclusive franchises granted to various cable and
> telephone companies in parts of the country as the "subsidy?"  Or are you
> referring the the High Cost Support funds which used to be implicit
> internal transfers in the old Bell System (not taxpayer funds), or now
> explicit transfers through the Universial Service Fund? Or are you
> referring to the US Department of Agriculture Rural Utilities Service
> financing which assists non-RBOC rural telephone and utility companies?
>
A combination of the franchises (which at least in San Jose, hardly
what I would call rural) and the pre-1996 copper plant.  Certainly,
I can guarantee you that the copper in many neighborhoods in San Jose
dates back to the 1970s.  My neighborhood is one such area.  According
to my local Cable Maintenance guys, the icky-pick cable that passes
for an F1 from my CO was laid in the 1960s and hasn't been replaced
(except a few feet here and there thanks to the Comcast inept
contractor and their rock-wheels).  As I understand it, up until
the divestiture, AT&T received a certain amount of tax funding for
each neighborhood they laid copper into.

There is no indication in most of San Jose that the pre-1996 copper
is going away any time soon.

Finally, claiming that USF is just an explicit transfer is a fallacy.
Look on your phone bill.  Have you ever seen anyone who receives
a credit on the USF or HCR lines on their bill?  Everyone I've ever
seen is a charge.  So, either the phone companies are pocketing
that money, or, there's some group of citizens somewhere who
are receiving what my friends and I are putting into that pot.

> Competitors have been given access to the legacy telephone copper plant
> (but generally not the cable coaxial plant) in most of the country. The
> legacy copper outside plant is quickly being replaced by post-1996 outside
> plant.  Soon there may be little or no pre-1996 outside copper plant
> left.  Ownership of inside wiring was transfered to the property owner
> a couple of decades ago.
>
Yes, but, the FCC is now reducing that access.  Also, the fact that
the current ILEC acts as gatekeeper for said access results in various
anti-competitive practices being used by the ILEC to reduce service
quality to competitive carriers.  OTOH, if the ILEC was in a position
of either operating the infrastructure, OR, competing with other
providers, not doing both at the same time, I believe the behavior
would be substantially different.  As it stands today, the ILEC
has a substantial incentive to provide better infrastructure response
to it's in-house service provider than to competing service
providers that don't own their own infrastructure.

> Several municipalities in the US have spent taxpayer funds, or taxpayer
> backed, to build a municiple outside plants.
>
True.

> What's interesting is there is relatively little competitive activity or
> demand for access in locations (i.e. rural) with the largest government
> incentives,  while there is a lot of demand in areas (i.e. urban) which
> had minimimal or no government incentives and were funded by shareholders
> and other investors.  The RBOCs and MSOs have been selling off their rural
> assets to other companies for any years.
>
Also true, but, in part, that is why those incentives are there.

> So what is it exactly you think taxpayer funds paid for and should now
> own?

1.	Most of the existing pre-1996 copper "last-mile" infrastructure
2.	The right-of-way
3.	Most of the B-Boxes
4.	At least an easment for access to the MDFs if not the MDFs themselves.
5.	The ridiculous amount of money granted to Pacific Bell as a result
	of A-95-12-03 where they actually convinced the PUC that converting
	from D4/AMI to B8ZS-ESF required them to completely replace their
	inter-co infrastructure and that they only had to do this to accomodate
	ISDN.  (At the time most of the D4/AMI infrastructure was deployed,
	the need for and superiority of B8ZS/ESF was well known and this
	was really just another example of Pacific Bell's passive aggressive
	attitude towards ISDN).

I'm sure if I reviewed the last 10 years of rulings I could find other 
examples
of Pacific Bell/Pacific Telesis/SBC receiving sbusidies disguised as 
rate-hikes
from the California PUC.

Owen

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