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Re: What do we mean when we say "competition?"

  • From: Matthew Crocker
  • Date: Tue Nov 15 11:49:32 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
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
 That may or may not be a good thing, but let's
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,
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