Free Press caught and isolated an excellent question from Senator Frank Lautenberg (D-NJ) to FCC Chairman Genachowski during recent hearings. The Senator notes that many Americans do not have sufficient access to broadband but 19 states have enacted barriers to make it harder for communities to build their own.

FCC Chairman said he thinks innovative municipal solutions should be encouraged and that he looks forward to working with the Committee to address the obstacles. 

One of the reasons we so strongly support local, community owned broadband networks over European-like regulations on private companies is that large institutions regularly game the rules. We wrote about this last year, when Free Press called on the FCC to stop Verizon from ignoring the rules it agreed to for using certain spectrum. Senator Franken, who has taken a strong interest in preserving the open Internet, has just reminded the FCC that creating rules does no one any good if it refuses to enforce them. Not only has Comcast announced that its own Netflix-like service does not count against its bandwidth caps, some researchers found evidence that Comcast was prioritizing its own content to be higher quality than rivals could deliver. Comcast has denied this charge and proving it is difficult. Who do you believe? After all, Comcast spent years lying to its own subscribers about the very existence of its bandwidth caps. The vast majority of the network neutrality debate centers around whether Comcast should be allowed to use its monopoly status as an onramp to the Internet dominate other markets, like delivering movies (as pioneered by Netflix). Comcast and many economists from Chicago say "Heck yes - they can do whatever they like." But the vast majority of us and the FCC have recognized that this is market-destroying behavior, not pro-market behavior. So when Comcast was allowed to take over NBC Universal, it agreed to certain conditions imposed by the FCC to encourage competition. But the FCC has a long history of not wanting to enforce its own rules because it can be inconvenient to upset some of the most powerful corporations on the planet.

The absurdity of AT&T's push to define broadband as 200kbps is so great, it boggles the imagination. We developed the graphic below to highlight just how slow 200kbps connections are. Feel free to spread it around. Higher quality pdf below.

I recently stumbled across a great point regarding the spectacular failure of the US (mostly the FCC, but Congress should certainly share some of the blame) to properly regulate broadband connections to the Internet. US policy results in a few massive providers dominating the market. Fred Goldstein, a principal of Interisle Consulting Group, wrote the following:

In truly competitive markets that display some degree of commodity-like characteristics, large and small vendors tend to coexist. I'm drinking coffee right now, which is a good example. Maybe Maxwell House and Folgers (and their parent companies) have a large share of the market, competing on price for their swill. But there is plenty of room for others to differentiate their product. Dunkin and Starbucks have built huge chains on their own style of semi-premium product, while another couple of niches of premium and superpremium beans are easy enough to find. Food markets tend to be like this; check out any Whole Foods (a/k/a The Museum of Modern Vegetables) for a supply of priced-above-commodity products. I feel foolish for selling most (not all, thankfully) of my Whole Foods stock when it was in the dumps a couple of years ago. The same thing happens in many fields. Apple itself sells computers above commodity price levels. There's a whole "high end" audio business catering to those who like to show off how much they can afford to spend. The automobile industry has mass-market commodity cars and several premium tiers. Internet access in the US lacks that because the natural monopoly on outside plant is not properly regulated. If it were treated here by EU norms, then any number of ISPs could access the wire. Some would just be cheap; some would offer premium help desks among their services. That doesn't happen, however, when the usual number of "competitors" is two. Even more so when those competitors agree that they should divide up markets between themselves rather than overbuild, or (heaven forbid) let outside information providers onto their facilities. The wire should be regulated. ISPs shouldn't.

Amen. Physical connections are a natural monopoly. Even if the economics supported many physical providers, having so many would be terribly inefficient. Much better to have networks that are owned by the community and have independent service providers competing to deliver services -- just like the roads.

The Minnesota Public Utilities Commission is hosting an informational meeting on Thursday, January 12, at 1:00. For those who cannot make it in person, it will be webcast here. The PDF announcement is here.

The Minnesota Public Utilities Commission will convene an informational meeting in the format of panel discussion to examine the implications of the FCC Order with respect to (i) universal service funding, (ii) intercarrier compensation and (iii) the substantive and procedural tasks that the Commission can be expected to face in the coming months. The meeting will commence with opening remarks by Commission Chair Ellen Anderson and Commissioner Michael Rothman of the Minnesota Department Commerce. The panel discussion will be moderated by Commissioner Betsy Wergin. The panelists are:

• Jeff Lindsey; CenturyLink
• Brent Christensen; Minnesota Telecom Alliance
• Dan Lipschultz; Moss Barnett PA, competitive carrier perspective
• Tom Cohen; Kelley, Drye Warren LLP for the American Cable Association
• Dave Conn; T-Mobile
• Dennis Ahlers; Minnesota Department of Commerce.

The Commission will welcome questions from attendees as time permits.

I would have specifically liked to hear how the rural telephone coops would be affected by the inter-carrier compensation changes as those charges have helped many rural communities gain access to broadband. Apparently, the MTA rep will represent their viewpoint.

One of the reasons community broadband networks face so many unique hurdles (often created deliberately by states in response to cable/dsl lobbying) is because of the many ways in which campaign finance corrupts our national and state governments. Community broadband networks are focused on meeting community needs, not sending lobbyist armies into Washington, DC, and state capitals (though one of things we do at the Institute for Local Self-Reliance is offer help to those that do push pro-community agendas in these areas). To understand why DC is so focused on furthering the corporate agendas of AT&T, Comcast, Time Warner Cable, and others, is to understand the revolving door. (Also, understanding capture -- which we have explained previously.) In short, many of the people who make decisions about telecommunications policy in DC have worked, will work, or are presently working for the massive companies that effectively control access to the Internet in most of America's communities. The good folks at Geke.US have created the following Comcast Venn Diagram illustrating a small piece of the DC revolving door. Reforming this system is a deep, seemingly intractable problem. But for those looking for answers, a good place to start is with the work of Lawrence Lessig. I just finished his Republic, Lost, which offers a grand tour of the problems resulting from the present system of campaign finance. You can also see a number of his presentations here. His organization, the Rootstrikers aim to get to the root of problems rather than being distracted by trying to fix symptoms of deeper problems. This is precisely what we do with our focus on community networks. Many focus solely on resolving digital divide issues, improving rural access to the Internet, lowering the cost of broadband, or the various other problems that result from narrowly-focused private corporations owning and controlling essential communications infrastructure with inadequate regulations.

It's a new year, but most of us are still stuck with the same old DSL and cable monopolies. Though many communities have built their own networks to create competition and numerous other benefits, nearly half of the 50 states have enacted legislation to make it harder for communities to build their own networks. Fortunately, this practice has increasingly come under scrutiny. Unfortunately, we expect to see massive cable and telephone corporations use their unrivaled lobbying power to pass more laws in 2012 like the North Carolina law pushed by Time Warner Cable to essentially stop new community broadband networks. The FCC's National Broadband Plan calls for all local governments to be free of state barriers (created by big cable and phone companies trying to limit competition). Recommendation 8.19: Congress should make clear that Tribal, state, regional and local governments can build broadband networks. But modern day railroad barons like Time Warner Cable, AT&T, etc., have a stranglehold on a Congress that depends on their campaign contributions and a national capital built on the lobbying largesse of dominant industries that want to throttle any threats to their businesses. (Hat tip to the Rootstrikers that are trying to fix that mess.) We occasionally put together a list of notable achievements of these few companies that dominate access to the Internet across the United States. The last one is available here. As you read this, remember that the FCC's National Broadband Plan largely places the future of Internet access in the hands of these corporations.

It is hard to avoid becoming cynical when watching the federal government interact with big corporations like AT&T. So when AT&T announced it would merge with T-Mobile, giving AT&T and Verizon a combined 3 out of 4 cellular subscribers, I thought two things: 1) What a terrible idea. Higher prices, fewer jobs, less choices, etc. 2) The Federal Government will likely not prevent it - instead opting for some minor concessions that no one will bother to enforce. Sometimes, it is very good to be wrong. Cecilia Kang of the Washington Post, decodes the language from Wall Street to explain the biggest winner from the federal government blocking the merger: consumers.

“Without the combination, we think the wireless industry will be further weakened by continued hypercompetitive activity, particularly regarding subscriber acquisition costs,” said Nomura Securities analyst Mike McCormack. That means customers can still get lower rates as the industry competes for their dollars. T-Mobile, for example, will continue to be a low-cost competitor, according to consumer advocacy group Consumers Union. A survey showed that data plans from T-Mobile were $15 to $50 less per month than those offered by AT&T.

An excellent reminder that what is best for Wall Street is not what is best for the 99%. Big companies like AT&T find competing for customers a hassle that lowers their profits -- they consider a market with four sellers to be hypercompetitive. In wireline, they have acquiesced to the "competition" of two competitors -- cable and DSL. This is one reason communities build their own networks -- the private sector is not truly competitive when it comes to ISPs and most communities have no prospect real of improvement absent a public investment. But we should rejoice in this victory -- because we earned it. Without the hard work of many grassroots groups, it is hard to imagine the Department of Justice or FCC standing up to such a powerful corporation.

Dane Jasper, the CEO of Sonic.net, one of the few ISPs to survive the death of broadband competition over the past ten years, wrote about "America's Intentional Broadband Duopoly."  It is a short history of how the FCC's flawed analysis (helped along by incredible amounts of lobbying dollars, no doubt).

He starts by asking when the last time anyone offered to sell you broadband over power lines (BPL).  The FCC decided that cable and telephone companies shouldn't have to share their wires (which are a natural monopoly) with competitors (creating an actual marketplace for services) because BPL, satellite, and wireless would put so much competitive pressure on DSL and cable.  FAIL.

Then, in the Brand X decision, they ruled that Cable would not be required to allow competitors to lease their lines either. The FCC did this by reclassifying broadband Internet access as an “information service”, rather than a “telecommunications service”. As a result, common carriage rules could be set aside, allowing for an incumbent Cable monopoly. This decision was challenged all the way to the supreme court, who ruled in 2005 that the FCC had the jurisdiction to make this decision. To close out Powell’s near-complete dismantling of competitive services in the U.S., the FCC took up the issue of ISPs resale of DSL using the incumbent’s equipment, also known as wholesale “bitstream” access. If Cable is an information service under Brand X, why shouldn’t Telco have the same “regulatory relief”? The result: the FCC granted forbearance (in other words, declined to enforce its rules) from the common carriage requirements for telco DSL services.

For those who are thinking that wireless is finally competitive with cable and DSL, don't forget that while 4G appears much faster (because so few people are using it presently), it still comes with a 2GB monthly cap. So if you want to do something with your connection aside from watching one movie a month, 4G is not competitive with a landline connection.

Update: The Senate voted against turning the Internet over to Comcast, AT&T, and other major carriers. How did your Senators vote? The US Senate began debating network neutrality yesterday - the historic governing principle of the Internet that ISPs should not be allowed to tell their users where they may or may not go and should not prioritize some connections over others merely because it generates more revenue for the ISP. As Al Franken has said several times, this is the 1st amendment for the Internet - protecting everyone's speech. It prevents a few massive companies (or even local governments where they offer access to the Internet) from exerting too much influence over what subscribers are able to do on the Internet. Unfortunately, many Senators are campaigning against this principle, in part because they have been misinformed as to what it means and in part because they are getting a ton of campaign cash from corporations that recognize how much more profitable they would be if they could charge users extra to go to YouTube. There will be a vote today on a resolution of disapproval for the mild network neutrality rules proposed by the FCC last December (which the FCC Chairman chose to water down in part because he thought it would be less controversial -- FAIL). We would like to recognize some of those who have stood up to protect the open Internet, starting with Free Press. The American Sustainable Business Council authored an op-ed:

The truth is that if we want to make sure small businesses can grow with the assistance of broadband, the Internet must remain open.