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: David Schwartz
  • Date: Tue Nov 15 23:17:18 2005

> --On November 15, 2005 6:28:21 AM -0800 David Barak
> <[email protected]> wrote:

> OK... Let me try this again... True competition requires
> that it be PRACTICAL for multiple providers to enter the
> market, including the creation of new providers to seize
> opportunities being ignored by the existing ones.

	The worse the existing provider it is, the more practical it is to compete
with them. If they are providing what people want at a reasonable price,
there is no need for competition. If they are not, then the it becomes
practical for multiple providers to enter the market. If you assume that the
cost to develop existing infrastructure is not insanely less than the cost
to develop new infrastructure, the isolation from competition comes directly
from the investment.

	For example, if Bill Gates took a few billion dollars out of his pocket and
launched 80 satellites to provide wireless Internet access, it would be damn
hard to compete with him if he wasn't trying to recover those few billion
dollars. But if you spend a few billion, you get a few billion worth. Anyone
else can spend the same amount and get the same advantage.

	If he already has the satellites and is providing the service other people
want at a low price, then other competitors will lose. But so what?
Consumers win. And competition doesn't exist to benefit the competitors.

	If he already has the satellites but is not providing the service other
people want or isn't charging a reasonable price, or both, then anyone else
can make the same infrastructure investment for a comparable cost. If he's
not satisfying demand, the demand is still there, and he's just losing some
of the benefits his infrastructure could be giving him.

> No... Actually, the lack of market forces in the beginning
> is what allows the incumbent providers to have an advantage.

	There is only a lack of market forces if the incumbent is meeting the needs
of the consumers. And if they are, there is no need for a competitor.

> Nope... What I want is LESS subsidy to incumbents and
> a recognition that infrastructure built with public funds
> belongs to the public.  Said infrastructure should be equally
> open to all service providers on equal terms, regardless
> of who holds the contract to maintain it.
> Imagine instead of today's scenarios, an environment where
> SBC didn't think they OWNed the pipes, but, instead, the
> city's owned the copper in the street and contracted with
> <entity that doesn't sell direct end-services> to maintain said
> infrastructure for the city.  Then, all RBOCs/ILECs/CLECs
> paid the same price to the City through said entity for
> the same services, whether dry copper connection, dark
> fiber, OC-X, etc.  The city would have a term to the contract
> and would put it up for rebid periodically.
> That would be market forces at work and not MORE regulation.

	How would governments owning the infrastructure and setting the rules not
be more regulation? And how would designing a system that favors one set of
business models and effectively prohibits others that would otherwise be
viable not be more regulation?

	Competition in business models, infrastructure technology, and the like is
just as important (if not more so) as competition in price and services
within a given model.

	What happens if the government builds a copper infrastructure and someone
else wants to build fiber? How can they compete with the subsidized
infrastructure you propose (what else can you mean when you say the "city's
owned the copper")?

> What we have today is an attempt to reduce regulation without
> recognizing the need to correct the damage already done
> by regulation.

	You can't "correct" the damage. It's not possible. All you can do is pick
winners and losers *again*. The previous chosen winners and losers don't
really exist anymore in their previous form -- all you can do is more