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

http://www.crocker.com