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BrandX - The decision is clear and the direction we are headed is now cast. |
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Written by Ken DiPietro
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Thursday, 30 June 2005 |
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Page 1 of 2 Om Malik has another excellent blog entry that discusses where Chairman Martin's vision is taking us.
Parity is the new catch phrase, learn it, live it, love it and if you're an independent ISP you are going to grow to hate it.
"What we have hear is a failure to communicate."
It's no secret that the United States has a serious deficiency when it
comes to deploying broadband even though the extent of the problem is
debatable. One thing that is clear is that a fair portion of this
country has limited (if any) choice as far as broadband connectivity is
concerned. In my last commentary
I took a hard look at what our options are and made an attempt to show
that we need a mix of connectivity specialties in order to ignite
broadband deployment in this country. Instead, we now can look forward
to a very different landscape.
Here's the deal, line sharing is dead. Maybe not right this minute but take this to the bank, it will be. In this very short statement
released on the FCC's web site commenting on the decision made by the
Supreme Court on the BrandX case FCC Chairman Kevin J. Martin said,
"This
decision provides much-needed regulatory clarity and a framework for
broadband that can be applied to all providers. We can now move forward
quickly to finalize regulations that will spur the deployment of
broadband services for all Americans."
This is
what you need to know, for quite some time now the lobbyists for the
telecommunications industry have been consistently repeating the same
message to the FCC. Reduced to its most simplistic the message is that
competition, as it is mandated by the current interpretation of the
Telecommunications Act of 1996 is causing the current problems the US
is facing with respect to broadband deployment. The argument has some
validity (all lies have a kernel of truth, right?) if we follow the logic.
Independent ISPs are only interested in deploying in the areas that will make them money (DUH) and there is no parity (there's that word again)
to the mandate that universal coverage needs to be provided. Since the
telecommunications world uses a model that utilizes the densely
populated areas to subsidize the rural (read less profitable)
areas if the independent ISPs are allowed to usurp the revenue the
telecommunications industry needs to provide service universally.
Let me translate that for you in case you're having trouble with the telecommunications industry's ability to communicate.
We need the entire market all to ourselves in order to make our business model work.
Certainly,
we can see that this is something that would be great for this country
based on over a century's worth of empirical data we have collected.
After all, the American public was completely satisfied with the way we
were all treated when we had a monopoly telephone company in the past. (The sarcasm I felt when I typed those last two sentences was nothing short of scalding.) Let's
not talk about the fact that the telecommunications industry wanted no
part of this "Intraweb Thingy" when it was first announced. They
completely ignored developing any business in this new experiment
leaving it instead to the private sector. Let's also not discuss that
the deal that was struck when the Telecommunications Act of 1996 was
formed was that the "Baby Bells" would be granted access to the revenue
generated from Long Distance if they opened up their networks. We also
need to forget the promises
Verizon (then Bell Atlantic) made to deploy broadband in exchange for
huge tax breaks in Pennsylvania that were never kept. As long as we can
follow the above recommendations we can all go to bed and sleep
comfortably knowing that our friends at the telephone company have
everything in hand and under control.
What is the bottom line?
Here's
the scoop, the Internet is made up of quite literally millions of
connections all exchanging information with each other. At the risk of
stating the obvious, the more each one of these connections cost the
more expensive it becomes for all of us.(DUH)
Any
of us that have a long-term memory that stretches back to the telecom
monopoly days can easily remember when $.25/minute was a "good price"
for a long distance call. The reason all of us enjoy the inexpensive
rates we do today is solely because the monopoly was broken up and
competition was allowed to drive down the cost. Need further proof?
When was the last time you received a notice from your friendly local
telephone company informing you that your rates were going down? What?
You can't remember? That's funny, I'm sure you can remember when the
several increases in your phone bill, I certainly can. Now, anyone care
to guess what might happen if the telephone company was to become the
sole source of Internet connectivity at retail rates?
This is
what line sharing is all about. The Telecommunications Act of 1996
allowed independent companies to get reduced (the term is wholesale)
rates from the telephone company to provide services over the telephone
network. The telephone companies were a little less than cooperative in
this with numerous reports of all kinds from too many companies to
count claiming "questionable" behavior on the part of the telephone
company. Most recently, SBC has dropped rates on their DSL service in
many of the markets they service but the cost of the wholesale line, as
provided to independent providers, is billed at such a rate that
independent ISPs are claiming that there is no way a wholesale provider
can match that price. How can that be? Isn't that the definition of
Antitrust, you ask?
"U.S. legislation designed to
prevent businesses from price-setting or other secret or illegal
collaborations that circumvents the natural forces of a free market
economy and gives those engaging in the anti-trust conduct a covert
competitive edge."
-Definition courtesy of Legal-Explanations.com
All
that that is extraneous to this conversation and instead we should be
looking at what this direction that Chairman Martin has declared might
mean to us.
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