Comcast

The New York Times' editorial board seems stuck in a time 1992 time warp in its "Competition in Cable TV" editorial that nonsensically disagrees with the DC Appeals Court for having the good sense to see what everyone can see -- that there is very active competition for video service in the U.S.  

The New York Times acts like it is still 1992, that since then nothing has happened, and that the 1992 Cable Act and the 1996 Telecom Act didn't succeed wildly in promoting competition.

Thank goodness the DC Court of Appeals considers facts and is in touch with the reality of "Competition in Cable TV." 

• 32 million Americans get video service from a cable competitor: DBS providers DirecTV and Echostar, telcos Verizon and AT&T, or overbuilder RCN.
• Cable has earned 38 million new broadband subscribers -- a completely new service since the 1992 or 1996 Acts.
• Cable has earned 18 million new telephony subscribers, an entirely new service for cable, since the 1992 or 1996 acts.
• Cable also has invested in Clearwire to create a fifth national wireless broadband provider.
• And America's cable industry is the only one in the world that has built out a nationwide fiber-coax infrastructure increasingly capable of 50 MBs of broadband speed.

And that's not competition?!   

It seems like The New York Times editorial board needs to get out and about more, a lot has changed since 1992 when they apparently last went outside.

The data and evidence show that broadband is not a public utility warranting economic regulation of prices, terms and conditions; this is contrary to the assertions of net neutrality proponents: the Markey-Eshoo Bill, FreePress, the Open Internet Coalition, and Google's Internet Evangelist Vint Cerf, among others.

Why is broadband not a public utility? 

First, it is a competitive service, not a natural monopoly service.

A public utility presumes "natural monopoly" economics where economies of scale and scope preclude the possibility of competitive facilities/services. 

• The roughly $200b in private risk capital invested in financially-successful U.S. competitive broadband facilities over the last several years is incontrovertible evidence that broadband does not enjoy natural monopoly economics.

Second, users have choice of access providers.

Comcast-Clearwire's 4G WiMax rollout starting in Portland today, as part of broader national launch this year, is powerful evidence of the vibrancy and dynamism of the facilities-based broadband competition trajectory in the U.S.

• This latest announcement provides an excellent opportunity to take stock of both the current state of broadband competition in the U.S. and the competitive trajectory of how the U.S. broadband market is getting increasingly more competitive.

Contrary to the parade of imperfection horribles claimed by anti-competition groups to try and justify a wide variety of new net neutrality-related regulations, the U.S. has more real and growing facilities-based broadband competition than any nation in the world.

The Comcast announcement provides powerful proof points of all the good aspects of vibrant facilities-based competition.

First quarter financial results prove that the success of the broadband sector's facilities-based competition, is an exceptionally strong foundation on which to build a National Broadband Strategy.  (See 1Q09 results: AT&T, Verizon, Comcast and Time Warner Cable, companies are listed by revenue size.) The results show:

Markets and competition work!

• Comcast and Verizon separately announced major investment/deployment plans for broadband within days of Congress' rejection of calls for open access/net neutrality regulation and dictated broadband speeds in the just-passed $800b stimulus package.

Congress wisely appreciated that encouraging and respecting private investment and inter-modal broadband competition is critical to:

• Spurring economic growth and job creation,
• Keeping the communications sector a healthy engine of the economy; and
• Getting the fastest broadband service to the most Americans soonest. 

Even in a severe recession, Comcast and Verizon are proof that companies will make private investments to expand broadband speeds and access, if their capital is welcome, and the government does not discourage investment and deployment by forcing open access network sharing and mandated net neutrality in the absence of any definable or measurable problem. 

Comcast announced today that it "plans to reach more than 30 million homes with faster speeds,"  and is "doubling speeds for most existing customers for no additional charge" in 2009. 

To the extent the FCC is fair and remains focused on encouraging competition and innovation, Comcast's response to the FCC staff's latest inquiry -- asking for clarification of Comcast's reasonable network management practices-- should largely put this particular matter to rest.

• By way of background, two days before the transition of Administrations, FCC staff sent Comcast a letter asking for clarification of why Comcast's competitive voice offering uses a different part of the network than Internet-driven VOIP services; and if it does use a different part of the network, why that competitive service should not then be regulated as a telecommunications service.
• In a nutshell, Comcast's response showed that it is operating precisely as the law/FCC/Supreme Court has directed and allowed. 

I am writing about this from a Net Competition perspective, because this isolated staff inquiry appears to:

The professional complainers who assert there is little broadband competition, or that the U.S. is falling behind on broadband, will no doubt ignore the indisputable facts -- that Comcast just announced major speed upgrades for most of its users and a new set of superfast or wideband tiers for high-end users.  

• Competition works!
  • Just like cable modems competitively prompted telecom providers to roll out faster and cheaper DSL, Verizon's fast Fios service is prompting Comcast and others to roll out faster network speeds and offerings. 
  • Competition for broadband customers is alive and well!
• The reality is that competitive markets respond much better and faster to changes in demand, supply and innovation than regulators could ever hope to achieve with their red tape. 
• I expect a muted response from net neutrality and national broadband policy proponents -- because the fact that competition  is succeeding in increasing speeds and lowering effective prices -- just isn't part of their complaining narrative and their broadband sky is falling outlook. 
  • The Open Internet Coalition, Save the Internet and Free Press will somehow find bad news in this great news story for consumers -- or they will "ostrich" and ignore it happened so they can continue to complain uninterrupted by reality or the facts.    

The Comcast DCOSIS 3.0 upgrade will "enable Comcast to double speeds for the majority of existing high-speed  customers at no additional cost."

Invited to speak at the ITIF forum on ITIF's white paper: "It's Time to End the Broadband Policy Wars" -- I so strongly disagreed with the framing bias of that white paper and the broadband policy debate in general that I decided I needed to counter it by writing my own white paper:

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  Don’t be Fooled by the National Broadband Policy “Straw Man”

   

  Exposing Three Hidden Policy Biases of Broadband Policy Proponents

The abstract of my six page paper is below:

FreePress is in utopian fantasyland in objecting to Comcast's new bandwidth-usage caps -- charging Comcast is profiting from "artificial scarcity" from a lack of broadband competition.

• Artificial Scarcity!
• Internet bandwidth is not infinite -- despite FreePress' utopian fantasy that bandwidth somehow should be infinite in FreePress' perfect world.
  • Any reasonable person understands Internet and broadband networks can not have infinite bandwidth and are not free.
  • Like any infrastructure, Internet/broadband networks are expensive to build and operate, and also require a constant investment of billions of dollars to keep pace with exploding demand.

FreePress is making another big strategic mistake in screaming "artificial scarcity!" in a crowded and congested Internet.