A new coalition of some struggling broadband competitors, NoChokePoints.org, is making claims that the "special access" market is being "choked" by lack of competition and is urging the FCC to reverse course and regulate lower prices for these competitors.
"Special access" is basically the business-to-business leasing market of the copper wire connections that link many buildings and cell towers to the Internet backbone at DS1 (1.5 Mbs) and DS3 (44.7 Mbs) speeds.
To solve this controversy and determine who is actually "choking," or holding up whom, I thought it would be instructive and interesting to consider how the beloved TV detective Columbo would apply his common sense questioning to get to the bottom of this whodunit.
The latest wireless statistics submitted to the FCC today show that the U.S. leads the OECD in wireless competition, use and price; the U.S. is not falling behind.
These data show why:
Monopoly net neutrality regulations are unnecessary;
The U.S. leads the world in wireless broadband adoption and use; and
Broadband mobility is as important as broadband speed to U.S. consumers.
The CTIA study is based on Merrill Lynch's research of OECD data. Please read the report's summary findings below:
"The price per minute of service in the United States is the lowest of the 26 OECD countries tracked by Merrill Lynch.
Consumers in the United States have the highest minutes of use per month of the 26 OECD countries tracked by Merrill Lynch.
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:
FreePress in petitioning the FCC to apply its Broadband Principles to wireless (because they currently do not apply to wireless) effectively has conceded that broadband is not the duopoly market they have long alleged, but is a competitive marketplace.
There are two primary problems with eBay-Skype's attempt to get the Government to force competitive wireless providers to carry Skype's free communications app under the guise of wireless net neutrality and Internet openness; first, it is wildly uneconomic, and second, it is anti-competitive.
The issue has surfaced in the news (USAToday, WSJ) as Apple enabled a Skype app on the iphone for use on free public WiFi networks, but not on the iphone's commercial network provided by AT&T; and again when Google's Android banned a tethering app because it violated T-Mobile's terms of service as reported by CNET.
I. Skype's .2% Uneconomics
What is uneconomics? Just what the term implies, not economic, unsustainable... arbitrage.
How U.S. wireless broadband competitors are heavily investing in infrastructure despite the recession;
That U.S. private wireless infrastructure investments dwarf the public investment in broadband in the stimulus pakage; and
That wireless broadband produces huge productivity benefits for the economy.
The big takeaway from this piece is that the fastest growing part of the U.S. broadband market, wireless, is strong, competitive and investing heavily -- which is very different than the state of non-communications industries in this economy.
For those who don't know Tom's impressive background... he most recently was one of the most senior advisors for Technology on President Obama's Transition Team, and he also is a past head of both the CTIA and the NCTA.
A post by a Google policy analyst yesterday attempted to make the economic case for open access in the U.S. and suggested reasons why American infrastructure providers should embrace a mandated open network model. This proposed theory warrants a strong practical rebuttal. This proposed case for the economics of open access does not hold up to close scrutiny, because it has fatal flaws in both logic and economics.
I.The fatal flaw inlogic in the case for the economics of open access:
Since the post assumes broadband markets everywhere are basically the same, it concludes that the open access experience in some European countries is relevant and applicable to the U.S. situation. The fatal flaw in logic here is the core assumption that European and U.S. markets are factually analogous. They are not. They are substantially different factually and structurally as I will explain in detail.
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:
Don’t be Fooled by the National Broadband Policy “Straw Man”
Exposing Three Hidden Policy Biases of Broadband Policy Proponents
Tim Wu's "OPEC 2.0" Op ed in the New York Times employs an embarrassingly inane analogy/metaphor. It also happens to be a factually bankrupt piece.
Why is Professor Wu's political analogy comparing bandwidth to energy, and a "bandwidth cartel" to OPEC -- embarrassingly inane?
The vast majority of people understand that the price of gas has increased dramatically in part because the U.S. government has severely restricted supply by banning a variety of energy supply alternatives.
The vast majority of people also understand that the price of bandwidth usage continues to plummet in large part because the U.S. Government has NOT restricted supply; on the contrary, it has encouraged free market competition, broadband investment and innovation that in turn -- has spurred vastly more supply of bandwidth.
In his op ed Professor Wu said: "In an information economy, the supply and price of bandwidth matters, in the way that oil prices matter: not just for gas stations, but for the whole economy."
A recent study by the Leichtman Group found 70% of American broadband subscribers are very satisfied with their service, and relatively few are actually seeking faster Internet access.
This suggests the drumbeat for a national broadband industrial policy, because America's Internet is too slow and falling behind the rest of the world, is just empty rhetoric and wishful assertions by Big Government types.
As I have blogged before, the facts are not the friends of those screaming for de facto nationalizing the Internet.
Bottom line: The more one learns about the facts about what benefits American broadband consumers actually enjoy, and what they demand in the future, it is not what the Big Government folks claim.
