shouting loudly

Sen. Kerry Asks How We Fix Broadband

On this FreePress page, Senator John Kerry has asked what you think we should do to fix broadband policy.

Here is my answer:

Force incumbents to interconnect & lease access

Dear Sen. Kerry,

Thank you for taking on this country’s appalling failure to compete internationally in the race for widespread adoption of top-speed internet service. Despite promises that “deregulation” would spur greater investment and better service, the US has fallen further behind the rest of our economic peers with more forward-looking policies.

The most important first step to this problem is to rewrite the Telecommunications Act in such a way as to mandate interconnection and leased access at reasonable rates. I urge you to help undo the damage caused by the FCC’s decision to treat broadband access differently than telephone service. By ruling (in the Brand X case) that these “information services” are not “telecommunications services” and freeing incumbents to close their networks to competition, the FCC effectively closed the door of competition shut in new entrants’ faces.

Because of mandated interconnection, the long distance voice telephone service market is booming, rates have dropped to almost nothing, and companies with good service are easy to find. A similar regulatory scheme, imposed on DSL and cable companies, could separate the roles of service provider and infrastructure provider.. If Verizon really is the best broadband service provider, then stick with them, but if they are not, we would have the meaningful choice to surf the web with somebody else.

Incumbent providers’ allies (e.g., Christopher Yoo) often insist that this will erode the incentive for new entrants. Quite the contrary, the economies of scale and the problem of sunk costs ensure that, except in the most lucrative markets (e.g., downtown office buildings), few customer bases will jump to a new provider at a high enough cost for the new provider to have a good chance to recoup the investment.

That is, few will do so without mandated interconnection.

But regulated rates for interconnection and facilities leasing can change this. If a new provider begins to provide better service and/or lower prices on leased lines and begins to accrue a solid customer base, then in some areas, they will have the revenue and incentives to roll out their own new lines. In short, making them more competitive on existing lines increases their ability to grow into viable competitors who will eventually help maintain and build the physical network.

This has worked in the countries that are lapping us on the information superhighway. Please fight to bring this policy home, improving broadband penetration, service, choice, and quality for decades to come.

For more details, please soak up all the knowledge Free Press can offer. In particular, Ben Scott, S. Derek Turner, and Marvin Ammori are deep reservoirs of knowledge on this issue. While I am far less expert than any of them, I am also happy to provide further input on this issue.

Sincerely,

Bill D. Herman
Ph.D. Candidate
Annenberg School for Communication
University of Pennsylvania

P.S. For more on the Brand X case, see this article:

http://news.zdnet.com/2100-6005_22-5764187.html

P.P.S. I also support network neutrality, an issue on which Free Press is leading the pack. For more on why I support this, please see:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=902071