Where there is a high rate of return on investment with old technology without any threat of competition, monopolistic incumbents have little reason to improve their networks and/or product offerings.
FairPoint Continues Fight Against Competition in Maine
Light Reading took an in-depth look at FairPoint's anti-competition, anti-public ownership lobbying in Maine, where it is fighting a stimulus award to a consortium that includes a public entity. We have previously covered goings-on in Maine where FairPoint is involved due to their terrible track record of offering services while pushing for rules that would prevent communities from building their own networks.
For those who are not familiar, FairPoint had bought the lines from Verizon as part of a tax-dodge called the "Reverse Morris Trust" (one loophole that might be closed before Verizon can abuse it again). FairPoint promptly went bankrupt, but not before screwing up service for thousands upon thousands of residents and businesses in New England (from months of screwed-up billing to weeks without telecom services). Now FairPoint wants to make sure many Maine residents have no choice in providers for the foreseeable future.
Carol Wilson's look at this situation is fairly comprehensive.
... Maine Fiber Co., won a $25.4 million grant to build what is called the Three-Ring Binder, an middle-mile fiber optic network that will include three fiber rings in Western, Northern, and Downeast Maine. Maine Fiber’s intent is to lease dark fiber as an open access network, and not to sell commercial services.
The Maine Fiber Company is a private sector entity that has partnered with the University of Maine System. Though the company will run the network, some fibers will be reserved for the schools - this is a common private-public partnership that is mutually beneficial. This network will be open access - meaning that all can use it on equal terms (as opposed to being monopolized solely by the owner, as FairPoint does with its network). But FairPoint sure doesn't want to deal with competition in the many areas that it currently monopolizes with poor service at high prices.
It [Three Ring Binder Network] is now facing a challenge from FairPoint Communications Inc. , which bought Verizon’s networks in Maine, New Hampshire, and Vermont, and has gotten a bill introduced in the state legislature prohibiting the state and state-owned divisions from providing telecom services to non-state entities.
Fortunately, the bill does not look like it will succeed.
The spokesman for FairPoint is quick to say they are not against competition... just as 100% of all incumbents do -- claiming to be for competition even as they do everything they can to preserve their monopoly power.
He asserts that Fairpoint won’t lease dark fiber because it is against company policy to do so. “We want people on our network.”
Of course they want people on their network! This is the modern paradigm for telecom companies - they use the ownership of a wire to own the customer. Such an approach great for telecom profits but leaves the rest of us disadvantaged relative to the rest of the developed world; they have smartly used government policy to break telecom monopolies -- either by regulating in the public interest (unbundling) or by building infrastructure that puts communities before profits.
Associate Communications and Network Services Director for the University of Maine explains that they can no longer wait for FairPoint:
“High-speed broadband access is center to our mission, there is no way you can get around it these days,” Letourneau says. “We went through half a dozen years where our research was being held back because a couple of private companies weren’t willing or able to make the investment in the infrastructure. We can’t ever be in that position again. We are probably the last region in the country to do this. We are not being cutting edge here -- we are just keeping up with the Joneses.”
FairPoint responds to the fact that its rates are too high:
Nevins concedes that Fairpoint’s rates are probably higher -- but that’s because Fairpoint isn’t getting tax dollars to build its network and must recover its investment in the marketplace.
This is absolute crap - networks in rural areas are heavily subsidized by a federal program called the Universal Service Fund. FairPoint's argument is essentially that a government that is subsidizing its services should not also subsidize another network that will compete with it. And on this, we can agree. Government programs that subsidize bad-actor private companies like FairPoint should be abolished. We must stop subsidizing their profits while they refuse to offer affordable prices and the speeds communities need. Further, any network receiving public money should be open to competitors on an open access basis because our tax dollars should not go to unaccountable monopolies.
As one of the commenters on that story noted:
Maine has a choice: Have the best middle-mile network in the country or have one of the worst, and forever be like a third-world country off on a remote edge of the continent.
Actually, most communities have this choice.