Don’t Blame Big Cable. It’s Local Governments That Choke Broadband Competition

http://www.wired.com/opinion/2013/07/we-need-to-stop-focusing-on-just-cable-companies-and-blame-local-government-for-dismal-broadband-competition/

by taylorbuley • 13 years ago

38 52 13 years ago

wired.com

ceejayoz• 13 years ago

Local governments heavily lobbied by Big Cable, in many cases... and outright sued by them when they attempt to do things like municipal broadband/wifi.

r00fus• 13 years ago

And in states like PA, the state government takes bribes from Comcast and slaps down municipalities that try to shake the boat. The Feds (if the corporatists continue to entrench power)

It will take big players like Google - and the increasing importance of access to data - to pry open this decades-old corruption scheme.

sc68cal3• 13 years ago

I'd strongly suggest looking into the backgrounds of the authors. One is a lobbyist and another is a former politico for Republican candidates.

Berin Szoka:

http://techfreedom.org/people/berin-szoka

Berin Szoka is the President of TechFreedom. Previously, he was a Senior Fellow and the Director of the Center for Internet Freedom at The Progress & Freedom Foundation. Before joining PFF, he was an Associate in the Communications Practice Group at Latham & Watkins LLP, where he advised clients on regulations affecting the Internet and telecommunications industries. Before joining Latham's Communications Practice Group, Szoka practiced at Lawler Metzger Milkman & Keeney, LLC, a boutique telecommunications law firm in Washington, and clerked for the Hon. H. Dale Cook, Senior U.S. District Judge for the Northern District of Oklahoma.
TechFreedom is supported by foundations as well as web companies and broadband providers (including Google).

Jonathan Henke:

https://en.wikipedia.org/wiki/Jonathan_Henke

Shortly afterward, Henke served as the New Media Director for the Republican Communications Office, an office of the Senate Republican caucus under the leadership of United States Senate Minority Leader Mitch McConnell (R-KY).[6] Congressional Quarterly wrote that Henke "launched one of the first and most successful blogger outreach operations on the Capitol Hill, one that has served as a template for other offices."[7] During his time as New Media Director, Henke contributed entries at QandO less frequently than before, and in January 2007, two other bloggers, Bryan Pick and Billy Hollis, joined QandO.
Henke announced in June 2007 that he would serve Fred Thompson's presidential campaign as an Online Brand Manager.[8] Though Thompson withdrew his candidacy in January 2008, Henke continued to work as a consultant, and started his own firm later that year.[9]

acgourley• 13 years ago

Those sound like good qualifications for someone writing on the matter - am I missing something?

sc68cal3• 13 years ago

Is it a good policy that will benefit the citizenry, or is it a policy that is the extension of a political ideology that believes that government should not regulate anything?

rayiner7• 13 years ago

Tech Freedom and the Progress and Freedom Foundation are think tanks, not lobbying outfits. Latham & Watkins's communications group does regulatory filings and advises companies on regulatory aspects of mergers and things like that, not lobbying work. I can't think of a background that qualifies someone more to talk about the hurdles created by municipal regulation than someone who actually has to deal with those regulations on behalf of his clients.

As for Henke, just because he's a Republican doesn't mean he's wrong...

sc68cal3• 13 years ago

Tech Freedom and the Progress and Freedom Foundation are think tanks, not lobbying outfits

Think tanks develop policy proposals and other types of information, that is then used by political parties. The Cato Institute and the Heritage Foundation are think tanks, that heavily influence policy proposals by Republicans.

As for Henke, just because he's a Republican doesn't mean he's wrong...

I absolutely agree. I don't think he's wrong. I just think it's useful to know someone's background. It provides context.

VMG• 13 years ago

I strongly suggest looking at the actual arguments presented in the article.

jacobquick2• 13 years ago

This article is ridiculous shilling. Who do you think lobbies state and local governments to keep the cost of entry high for access to the streets they've been digging around in? The "big cable" trade association who "shouldn't be blamed."

The cost argument is based on numbers that factor out long-term costs of letting contractors dig wherever they want. They rip the streets to shreds and since it's the lowest bidder the asphalt has to be completely redone after one or two winters. In Boston we watched this happen to most of the region during the big dig and that work was being done by the best people available.

The open access argument is absurd. What they mean is they want to run fiber down streets with high incomes and let the cable monopolies continue to gouge everyone else.

It's a real shame but if you want residential internet to get better in the US there's probably going to be a lot of federal spending involved. Which we could have managed back when all the cable lines were first being run. Back when we had a functioning government. In the 1970s.

rayiner7• 13 years ago

What they mean is they want to run fiber down streets with high incomes

You can't have your cake and eat it too. If you want cheap prices and high quality service, then you have to deregulate the industry, and a deregulated telecom industry will focus on the high-end consumers, just like every company does. Apple doesn't focus on making computers for poor people, and all those companies peddling their wares on Facebook aren't selling basic essentials affordable by poor people and people in rural areas. Someone in the tech industry should understand better than most that in nearly any industry, companies will chase premium, up-market consumers because that's where the money happens to be.

If you want poor people and people in rural areas to have high-quality internet service (or really, any internet service), you have to be willing to pay for that. The way municipalities have chosen to pay for that is granting utility monopolies. That decision isn't something that comes for free. It comes at the cost of worse service for the wealthier urban people who would get better and cheaper service in a free market.

Also, as a practical matter, municipal and state governments destroy everything they touch. I'm not a small government drum-beater, and I'm a proponent of regulation in many contexts, but the lack of transparency and scrutiny makes municipal government regulation the worst kind of regulation.

tbrownaw2• 13 years ago

If you want cheap prices and high quality service, then you have to deregulate the industry, and a deregulated telecom industry will focus on the high-end consumers, just like every company does.

Or acknowledge that regulations are not all created equal.

cube132• 13 years ago

If you want cheap prices and high quality service, then you have to deregulate the industry, and a deregulated telecom industry will focus on the high-end consumers, just like every company does.

Uh, if the industry is focusing on high-end consumers, they're going to be gouging the hell out of them. That's hardly cheap.

jacobquick2• 13 years ago

Apple isn't a utility so isn't a relevant comparison. Cake isn't a utility either, that's a foolish aphorism and is not a relevant comparison because we aren't talking about a limited resource.

I can have both reasonable prices and universal service because now that Verizon is cutting people off from land-based phone lines, broadband is the country's communications utility, and it is entirely reasonable for a society to use its elected government to construct infrastructure and guarantee utility service to all of its citizens. It means both regulation and spending at the federal level: Verizon or Google or whoever picks up the cost of digging where it's profitable, taxes are spent make them whole where it isn't, but the regulation is they have to do whole counties at once. Yes, once you've gotten everyone to 1gbps or 10gbps or whatever "as good as it can reasonably get" is you can go ahead and deregulate for a while.

Municipal governments have, for good reason, the right to manage their local right-of-way, because no one outside of town cares about that one blind turn on Middleofnowhere Street where someone's going to get killed one of these days. That's the only scale of government that can or will manage traffic safety or road conditions for local streets, and they have to have a say on how construction is done.

The federal government will end up writing a huge novelty check to solve this or it won't happen. It'll be 10 times bigger than it needs to be because the corruption there is somehow just as bad as at the municipal level.

VLM• 13 years ago

"If you want poor people and people in rural areas to have..."

"We" as in the people who control our culture, only want the 1% to have all the money. It seems pointless in that environment to allow poor people to have cable TV... they are not being permitted money, jobs, health care, education, healthy food... why bother running expensive fiber anywhere except the richest neighborhoods. Don't pander to a cultural view which has been obsolete for decades. "We" want the poor to be deprived.

"makes municipal government regulation the worst kind of regulation"

Its the impedance mismatch of a multinational getting regulated by a tiny city. Its just inherently wrong. Like having the military regulated separately by every little village, or having the EPA regulated by every little town rather than at the level of the pollution impact they regulate. Or having the feds decide HOA rules.

I will say if you ran a tiny one town CATV system, then it would be reasonable for a tiny town to regulate it. This is not whats being discussed of course.

glenra• 13 years ago

a deregulated telecom industry will focus on the high-end consumers, just like every company does.

It is not actually true that "every company" focuses on high-end, nor is it true that "that's where the money happens to be". There is at least as much money to be made by focusing on low-end consumers in most markets, at least when it's legal to do that. McDonald's and Burger King make more money than any high-end restaurant that charges $200/person; Walmart makes more money selling clothes than does Saks Fifth Avenue.

Those who want some service the most and are willing to pay for it often do get it first, but the masses generally get it soon after - and they get a BETTER PRODUCT - the bugs get worked out while serving the early adopters. The first silk stockings were made for the Queen of England, but within a generation similar stockings were affordable by the average working girl. The brilliance of the market is NOT in making more stuff for the queen - that is a very limited market opportunity - but in bringing costs down to serve the masses.

(I agree with some of the other stuff you wrote, just not the claim that companies inherently serve the rich first. Some do, some don't. And these sorts of regulatory restrictions almost invariably hurt the poor the most, as they have the most to gain from new options becoming available. Rich people can usually afford to opt out or buy their way out of the service level that poor people are stuck with - private schools, private security patrols, or in this case: buying your own satellite dish.)

roc3• 13 years ago

"You can't have your cake and eat it too."

Sure you can. You can grant ownership of the underlying cables to the company willing to build out the network, essentially granting them guaranteed utility profits even if a competitor springs up via the Open Access that you can mandate as part of the deal.

When DSL was oh-so-briefly deregulated, small towns might not have been enjoying the (relatively) high-speed bonanza their neighbors were shortly offered, but they were still getting DSL (inasmuch as they physically could) and AT&T was still profiting off the network, even when competitors were offering the higher-margin services over AT&T lines.

It worked just fine for voice services and it worked wonderfully for the short period of time it applied to data over that same network.

There's no reason it wouldn't work just as well if applied to data over fiber or coax or whatever else.

fluidcruft• 13 years ago

I gave up when I hit this nugget:

"The problem? Local governments and their public utilities charge ISPs far more than these things actually cost. For example, rights of way and pole attachments fees can double the cost of network construction"

Actually digging holes in streets, obtaining right-of-way access to private property, and putting up your own poles is half as expensive as just using the holes and poles the public has already built? Oh, really? I'm more inclined to think they're grousing about not being able to mooch the public's infrastructure investments for free.

schrodingersCat• 13 years ago

This article is partially correct. The mayor of my town was censured in an ethics committee hearing in part due to his shady dealings with a broadband provider. As a result, Comcast is STILL the only game in town. Did lobbyist have something to do with this? Undoubtedly. But clearly "big cable" is not the only part of the problem.

jbooth4• 13 years ago

Hi everyone, I actually signed one of these contracts as a local elected official.

We had no money, laying off teachers and cops 3 years in a row. Cable company shows up and offers to fund our public access TV and hook up a bunch of electronics, to the tune of $100-200k or so as part of the contract.

What the fuck do you think we did?

Yeah, we signed the contract, but it was their demands (we did have both comcast and verizon in the market, at least). We came cheap, because the fans of the free market have starved local governments of resources.

The cable companies have way more resources than any given local government except for a few cities. They're the ones playing the tune, we marched to it. Blaming it on local governments is willfully stupid.

adventured2• 13 years ago

So you're saying that local governments have less funds to spend today than they did 15 years ago? I don't think so. I wasn't aware America still had a free market, much less one that sprung up in the last 10 / 15 / 30 years to deprive local governments of their massive spending binge over that time.

The data I've seen indicates total government expenditures have doubled over 15 years, and it's even faster at the local level. The local + state spending haul is close to $2.6 trillion annually now. It's practically another federal government system in size.

What has actually happened is local and state governments ballooned in size massively since the late 1970s. Having over expanded without any means to actually pay for it, all based on insanely optimistic (fraudulent?) economic projections, now those governments are having to shrink due to their own poor management.

California is perhaps the greatest - and most well documented - example of this, both at the state and local level.

jbooth4• 13 years ago

So you're saying that local governments have less funds to spend today than they did 15 years ago? I don't think so.

Relative to costs, yes. Their funding has gone up, in general, by less than inflation[1]. Then account for the fact that their costs involve a lot of healthcare benefits that suffer 15% inflation, and relatively few things like electronics that get cheaper over time.

When you talk about things like 'ballooned in size', you're really missing the picture. Money that goes straight out of our coffers to the health fund isn't bigger government. It's more money, same amount of government.

[1] In my case in Massachusetts, it was strictly 2.5% revenue growth a year, a figure that's less than inflation in most years, certainly in the early 2000s which is the time period I'm talking. Commenters below illustrate a similar picture for California, your favored example.

cube132• 13 years ago

California is perhaps the greatest - and most well documented - example of this, both at the state and local level.

California's problem is mostly because of their ballot propositions, especially the effects of prop 13, which limits property taxes to 1% of the original sale price.

There are many additional propositions which have passed that increase spending(especially for schools and other services), which make it pretty much impossible for the budget to be balanced, because the state and municipalities have almost no way of increasing taxes, nor can they realistically cut spending.

kenster07• 13 years ago

I think what he saying is that large cable corporations are significantly wealthier than most local governments, and the stats would agree.

fredBuddemeyer• 13 years ago

willfully stupid is a perfect description - of your government. had you opened the process to any kind of competitive process you would find your coffers filled. i did this work ages ago and paid several hundred dollars just for the right to pass each home.

the cable companies laugh at local governments, all the way to the bank.

jbooth4• 13 years ago

We thought we did pretty well, double dipping by hitting up both comcast and verizon.

Maybe we could have played hardball and refused to renew the contracts, but who do you think wins there? Take away people's TV? You crazy? Then we'd have gotten the same people lambasting us here (because they're shills) killing us for driving too hard a bargain (because they're shills).

tmzt• 13 years ago

What exactly does the public access TV station do for the community? How does something like that fit into the modern world where the price of a TV studio (or handheld HD) is not prohibitive, and the content can be distributed via the internet?

Does the franchise protect the company recouping the cost of the physical plan or is it more of a monopoly on providing video service locally? Both cable and phone have their own extent systems and are not competing for physical access to some right of way, or what ever mechanism or reason the multichannel operators have long used to justify this system.

I haven't closely followed the so-called "national franchise" debate that took place a few years ago, other than that it was defeated.

The phone companies are talking about abandoning the POTS system on an accelerated schedule, but at the same time Verizon failed to invest in FIOS expansion, leaving the replacement for POTS low speed, long-distance ADSL service.

The cable companies have very belatedly been working on introducing an IP-based system based on a home gateway, similar to what AT&T's Uverse system uses.

I found it very interesting when the head of Cox Communications commented at a recent talk (in March I think) that he visited the valley 5 years ago, and then proceeds to talk up Palm.

I can understand why a local community would embrace and accept this solution to their fiscal problems, but we should debate whether the franchise system is holding us back technologically on regional and national level.

jbooth4• 13 years ago

Hey, missed this earlier.

Lots of people still use TV, and yes, the costs of the equipment they provided are relatively low. But we were starved for cash, that's why we could be bought cheaply.

Does the franchise protect the company recouping the cost of the physical plan or is it more of a monopoly on providing video service locally?

It's sort of a monopoly, in our case it was a duopoly. They have to come to an agreement with the town to provide service, but it doesn't (usually) prohibit the town from bringing in other providers. If I recall correctly, there were clauses that other providers couldn't come in for cheaper than they did.

I haven't closely followed the so-called "national franchise" debate that took place a few years ago, other than that it was defeated.

A version of this came up in MA when I was there, as a state wide franchise. It was basically a way for them to get access everywhere, for cheaper, without paying the towns and paying a smaller aggregate total to the state instead. I was opposed to that (not that I had a voice), because we needed every cent we could get from whatever source.

I agree that the net sum of the system is pretty silly.

wnevets• 13 years ago

Local governments lobbied by big cable. Comcast lobbied Harrisburg hard to gimp Philadelphia's free WiFi initiative

nostromo• 13 years ago

A friend and I, on a whim, spent a fair amount of time looking into how to create an ISP using our own hardware. The hardware is cheap, right? How hard can it really be?

But we ended up exactly as you'd expect from reading the article: trying to figure out how companies get pole attachment rights. If I wanted to pay a contractor to string a line between our houses, that should be doable right? Well, no. For our local government, there was no clear way to get approved to use the public utility lines. Once you find the office that manages pole attachments, if you ask them about the approval process, I guarantee you'll get blank stares.

I think it's possible that it's been so long since any new companies have been granted attachment rights, the people in city government don't even know what to do with you if you ask to apply. This leads you only one route: lobbying the city council, which is where our little experiment ground to a halt.

(Btw, if you want to see the positive aspect of having regulatory hurdles to run communications lines, check out this old picture of New York: http://www.baltimoresun.com/media/photo/2012-07/71033655.jpg and http://www.nwhistorycourse.org/ttcourse/Year2/unit2/week9/im...)

Vivtek• 13 years ago

I think I'm safe in blaming both - to different extents in each location.

aaronbrethorst• 13 years ago

Not in Seattle: http://gigabitseattle.com

Yourfags• 13 years ago

As an anecdote, I havn't even read the article, but I live in orleans parish in New Orleans, LA. I have a choice of two high-speed internet providers, Cox cable and AT&T, I have AT&T, and recently I was told I needed to switch to AT&T U-verse, which sounded great, I mean upgrades are good right? Months later I come to find out that my internet and phone which are now bundled together no longer work periodically, and during stormy times they practically never work: Long story short, my house is a) too far from the nearest point of service for anything faster than a 1.5Mbps connection, b) it's not real U-verse service c) I can't even keep the bundled phone and internet, though thankfully they did reduce our bill somewhat. The real kicker is though that for 6years there has been a lawsuit against Orleans parish because our former mayor was an executive of cox cable and made it ILLEGAL, yes illegal, for fiber optics to be installed in Orleans parish. It's ridiculous we're not talking high explosive weaponry, slaves, or other contraband; but I could just move out of my parish where the law isn't quite so foolish.

js2• 13 years ago

Riiiight.... like in NC where TWC lobbied successfully to restrict competition from local governments:

http://www.engadget.com/2011/05/22/nc-governor-will-let-cabl...

http://www.muninetworks.org/content/after-4-years-twc-buys-i...

This was after Wilson, NC was unable to get neither TWC nor Embark to build out a fiber network for its residents, so the city built it out themselves:

http://www.wilsonnc.org/living/fiberopticnetwork/greenlighth...

laurentoget• 13 years ago

This would be believable if the situation in Europe wasn't a direct counter-example.

They do have local governments there too. Yet with regulations forcing the owners of the local loop to share their facilities, they broke the monopoly of the ex state-owned phone operators.

yk• 13 years ago

It should be mentioned that fibers are a natural monopoly [1], that is a market were it is essentially impossible to win against the first guy in the market. This is, because the first company who lays fibers in a location has costs X for an expected revenue Y. The second company has also costs X, but only a expected revenue Y/2. And additionally the first company can roll over their dept, and can then operate at a smaller revenue. So as long as the competition is not willing to pay the additional costs for strategic reasons, it is very hard to compete against an already entrenched (pun intended) cable company.

[1] https://en.wikipedia.org/wiki/Natural_monopoly

BerinSzoka• 13 years ago

Folks, we at TechFreedom cover a wide range of issues. Just today, we joined 18 other civil society groups in EFF's lawsuit against the NSA's surveillance of telephone call records; announced an event in San Francisco on reforming the Computer Fraud and Abuse Act to rein in this overly broad law with reforms such as proposed in "Aaron's Law"; and endorsed reforms that would cut the red tape that prevents many of the schools and libraries that most need E-Rate funding from getting it. So.. please take a moment to look through the range of our work before leaping to conclusions. You might start by perusing our Facebook & Twitter feeds: http://twitter.com/techfreedom http://facebook.com/techfreedom

Don’t Blame Big Cable. It’s Local Governments That Choke Broadband Competition

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