Local governments do not favor themselves on taxes or right of ways or otherwise compete unfairly with incumbent telecommunications and incumbent cable companies. To the contrary, private incumbents enjoy a wealth of state and federal subsidies, guaranteed rates of return, regulated rates for pole attachments, etc. In addition, local telephone companies enjoyed years of regulated monopoly status to build positions of dominance they continue to enjoy. To pretend that these local incumbents, with their subsidies and regulated access, need to “level the playing field” to protect a “free market” against local government systems flies in the face of reality.
Goliath Regulator Asks For More Davids
In a column published today, Chairman Genachowski explains why the U.S. Needs 'Gigabit Communities.' It starts off with an accurate observation...
Walking the floor of the Consumer Electronics Show last week, I kept thinking of that line from Jaws, “You’re going to need a bigger boat.” All the Internet-connected, data-hungry gadgets that are coming to market sent a strikingly clear message: we’re going to need faster broadband networks.
... It’s essential to economic growth, job creation and U.S. competitiveness.
Yes! If only the head of the Federal Communications Commission understood what is preventing us from building those networks. Hint: It isn't a lack of demand. Google was inundated with applications for its gigabit service. Hundreds of communities have built their own networks (some of which he praises).
Local businesses get it. Mayors get it. City councils get it. And unlike Chairman Genachowski, they know what the problem is: little incentive for massive, established cable monopolies to invest in networks when they are harvesting record profits and subscribers have no other choices. Wall Street not only gets it, it actually rejoices in it!
Comcast's traditional Cable Communications continues to grow and generate copious cash flow.. We're big fans of the firm's Video and High-Speed Internet businesses because both are either monopolies or duopolies in their respective markets.
What is our FCC Chair doing about this problem? He helped Comcast to grow even bigger, with more market power to crush those rivals that he is calling on to build gigabit test beds.
Chairman G wants to spur hundreds of David's while refusing to curb Goliath's power. Bad news, Mr. Chairman, Goliath actually wins most of the time. Rather than doing his job, Genachowski is begging others to do it for him.
More and more, he sounds more like a cable lobbyist than a public servant. This is actually a pattern: the head cable lobbyist in DC is a former FCC Chief himself and a recent FCC Commissioner left for a job at Comcast just months after pushing for the Comcast/NBC merger.
The revolving door helps to explain why the FCC has refused to take meaningful action that might threaten the cozy relationship between supposed competitors that have divided the market to their benefit.
Consider that Chair Genachowski fully supported bandwidth caps before walking that back a tiny bit. But now the cable industry has admitted what the FCC should have known all along, bandwidth caps are about increasing revenue rather than managing congestion.
He seems to spend far more time with the big cable and DSL lobbyists than with the local governments and businesses that are actually building next-generation networks.
Local governments are essential for expanding needed networks and have a tremendous track record of spurring economic growth. Most started by trying to work with large incumbents but were rebuffed. Presently, some 19 states limit their ability to build networks and in some cases engage in partnerships with groups like Gig.U. While some FCC Commssioners, like Mignon Clyburn have spoken out forcefully against these restrictions, the Commission itself has done little to prevent them.
New testbeds are great but they don't solve our problem. We need an FCC Chair that will wrestle with the real problem: far too much of our essential telecommunications infrastructure is controlled by de facto monopolies unaccountable to the communities that depend upon them.
As Susan Crawford notes in her new book Captive Audience, our entire economy depends on a few powerful corporations that are effectively unregulated by either a competitive market or by smart government policy.
The result of this deregulatory environment? Well, I just have to wonder when this sentence of his column was written:
"Make no mistake, if the U.S. doesn’t continue to invest in our broadband infrastructure, somebody else will take the lead."
It would have made sense ten years ago. Take a look at the international rankings, Mr. Chairman. And it has only gotten worse since you took over.
Having Susan Crawford as the Chair of the next FCC would do wonders to making the FCC responsive to the needs of all America, not just the cable and telephone companies. But Comcast's David Cohen is far too big a Democratic Party fundraiser for that to happen, which is why we need more Rootstrikers to recognize that until we resolve campaign finance corruption, it will be hard to fix any other problem.
Revolving door graphic adapted from AJakeS & Life of Riley under Creative Commons.