North American Network Operators Group

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

  • From: Matthew Crocker
  • Date: Tue Nov 15 09:53:28 2005

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.
Technically anything is possible, I could walk on the moon if I had enough $$.

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.
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.

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.
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.

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

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

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.

Matthew S. Crocker
Vice President
Crocker Communications, Inc.
Internet Division
PO BOX 710
Greenfield, MA 01302-0710