TELECOM Digest OnLine - Sorted: Re: Broadband Competition Must Surely be Working

Re: Broadband Competition Must Surely be Working
23 Aug 2005 08:35:54 -0700 wrote:

> That is a Straw Man argument. The phone company DSL revenue was/is
> generated from existing infrastructure that was developed with the
> benefit of government sponsored monopolies and subsidies. They have an
> existing revenue and equipment base to support the expansion to
> fiber. Also, the cable companies that you reference were deploying in
> a new non-telecom market, also with monopoly protection. It wasn't
> until recently that they offered Internet or telecom services (I know
> when they did it, I had one of the first cable Internet connections in
> the area).

I don't agree. The "existing infrastructure" you speak of consisted
of obsolete technology in both switching and the local loops. It
worked fine for POTS and low speed dialup but it was no good for
higher speed work. The phone company had to invest in new facilities
to support broadband. This investment was done in a competitive

The cable companies had to compete against plain old rabitt ears, high
gain rooftop antennas, and satellite TV.

Obviously rollouts in different areas occured at different times. But
generally consumer broadband service was offered on cable and phoneco
at roughly the same time.

> I suspect the ROW is grandfathered onto existing ROW agreements used
> with the existing phone service. They are only deploying into areas
> that they already serve.

No, it is not. FIOS is treated differently. It is more difficult for
the phone company, but I suspect they chose this path to avoid

I still maintain that the capital cost to lay fibre optic, esp when it
can be done selectively to areas with the best customers, is not
unsurmountable. The cellphone world was supposed to be two companies,
but quite a few have built networks, and quite a few more sublet
services from those networks.

> You're missing the point. I currently have phone company DSL, and I'm
> quite happy with it. But I =DON'T= use the phone company ISP. Because
> the phone company is an infrastructure provider I can choose a
> different ISP, allowing me to tailor the services to my needs. I even
> pay a premium for that. What Verizon is doing is eliminating that
> option, forcing everyone into the FIOS equivilant of Verizon
> Online/MSN DSL but charging them 30% more for the priviledge. ...

> Because of the way the service is classified they are also free to
> control what traffic flows on their network. They can block Vonage
> just as easily as any other service; they can block traffic to
> "objectionable" web sites. This is not moving in a good direction at
> all.

I understand what you're saying -- since Verizon FIOS is deregulated,
they can do as they please, just as any other business may require
exclusive packages with their customers. (I don't think a nice fancy
restaurant would appreciate it if I came in, ordered only a cup of
coffee, and then ate a pizza I brought in with me.)

That is a problem with deregulation and the marketplace. There is no
guarantee there will be competition. Sure a busy corner _might_ have
three supermarkets involved in a price war, but could just as easily
have only grocery store who charges premium prices. That's the way it
is in a lot of markets in a lot of industries. There is no way around
it if you want deregulation and a free marketplace. That's how it

There is nothing stopping the cable company or a new business from
laying their own fibre or whatever network and offering their own
service, undercutting Verizon's FIOS prices. If Verizon FIOS is
priced so unfairly high, someone else should be able to undercut them
(presuming there is a demand by customers to use their own ISP.)

The other alternative is to go back to regulation and control the
prices. Then we're back to the old Bell System.

As to ISP's, I expect a consolidation of them because of a variety of
factors in the industry.

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