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competition
Content tagged with "competition"
Antitrust Allegations Against Comcast Nothing New
Verizon and Big Cable Win - Competition Loses
The Department of Justice released a statement on August 16th, that it will allow the controversial Verizon/SpectrumCo deal to move forward with changes. We have watched this deal, bringing you you detailed review and analysis by experts along with opinions from those affected. One week later, the slightly altered deal was also blessed by the FCC.
Many telecommunications policy and economic experts opposed the deal on the basis that it will further erode the already feeble competition in the market. In addition to a swap of spectrum between Verizon and T-Mobile, the agreement consists of side marketing arrangements wherein Verizon agrees not to impinge in the market now filled with SpectrumCo (Comcast, Time Warner Cable, Cox, and Bright House Communications).
Verizon has been accused of hoarding spectrum it doesn't need. The marketing arrangements constitute anti-competitive tools that the DOJ has decided need some adjusting. From the announcement:
Chattanooga Gets 150 More Jobs... From Comcast
Just on the heels of Time Warner Cable announcing 81 new jobs in Kansas City in response to the newly competitive environment created by Google's Gig, we learned that Comcast is adding more jobs to its workforce in Chattanooga.
In talking points, the lobbyists and spokespeople for these major carriers often claim that community networks will result in less investment from the existing providers, not more. This is theoretically absurd, as competition drives increased investment. And empirically, we almost always see existing providers invest more as a response to losing their monopoly, not less.
According to Ellis Smith of the Chattanooga Times Free Press, 150 new jobs will be added by the end of the year. Ellis spoke with Jim Weigert, vice president and general manager of Comcast Chattanooga:
"Chattanooga is often at the top, not only in our division but across the country in terms of performance,” Weigert said. “Our strength and record of success made it a contributing factor when they selected a location."
Comcast and others, including AT&T, have had to step up their game in Chattanooga to keep customers who suddenly had a real choice.
Regardless of whether or not today's Chattanoogans connect to its publicly owned network, they benefit. Consumers get better service, affordable rates, and advanced technology simply because the network has created competition.
Unions and DSL Customers: Verizon Knocks Out Two Birds With One Stone
If you are a current or potential Verizon customer, by now you know that you no longer have the option to order stand alone DSL. When the business decision became public knowledge in April, DSL Reports.com looked into the apparent step backward and found existing customers were grandfathered in but:
However, if you disconnect and reconnect, or move to a new address -- you'll have to add voice service. Users are also being told that if they make any changes to their existing DSL service (increase/decrease speed) they'll also be forced to add local phone service. One customer was actually told that he needed to call every six months just to ensure they didn't change his plan and auto-enroll him in voice service.
By alienating customers from DSL, Verizon can begin shifting more customers to its LTE service, which is more expensive. Susie Madrak, from Crooks and Liars, speculated on possible repercussions for rural America:
Rural areas could see the biggest impact from the shift, as Verizon pulls DSL and instead sells those users LTE services with at a high price point ($15 per gigabyte overages). Verizon then hopes to sell those users cap-gobbling video services via their upcoming Redbox streaming video joint venture. Expect there to be plenty of gaps where rural users suddenly lose landline and DSL connectivity but can't get LTE. With Verizon and AT&T having killed off regulatory oversight in most states -- you can expect nothing to be done about it, despite both companies having been given billions in subsidies over the years to get those users online.
The belief is that current DSL customers who don't want (or can't afford) the switch to the LTE service will move to Verizon's cable competition. Normally, losing customers to the competition is to be avoided, but when your new marketing partners ARE the competition, it's no big deal.
Google Creates Competition in Kansas City, TWC Hires 81 People
The company, which currently employs about 900 locally, wants to fill customer service, finance, sales and other positions.These are the jobs that result from competition - which does not exist when the providers a limited to a complacent duopoly comprised of a single cable company and a single telephone company. This is one of the way that community networks create jobs. Community Networks create traditional jobs to offer their own services (and a multiplier effect by using local accounting, local marketing, and other services). But they also create more revenue for local papers (advertising) and job opportunities with rival companies that suddenly need to fight for subscribers. On a different track, Light Reading says it has a copy of Google's franchise with the city and notes that Google is under no obligation to serve everyone in the city. However, Karl Bode rightly notes that it was the state legislature in Kansas, flush with AT&T campaign contributions, that revoked the authority of local governments to require cable providers to serve everyone. Presently, 14 "fiberhoods" in Kansas and 49 in Missouri have met the registration goals and will be among the first served. Google will build to any fiberhood that meets the minimum threshold of interest. One cannot blame Google then for only building where they will profit. In fact, this is what one would expect any rational profit-maximizing company to do. It is a failure of governance to require that everyone have access to an essential infrastructure. And we know what causes these failures of governance - systematic legalized bribery in our campaign finance system. Light Reading does note that the franchise is far more generous to Google than overbuilders can typically negotiate. This is a result of Google offering such a unique product. Local leaders decided to effectively subsidize Google's network with favorable terms in the right-of-way, including making inspections as quick and painless as possible.
Wall Street: Lack of Competition Allows Comcast to Raise Prices Whenever It Wants
The Lafayette Pro-Fiber Blog alerted us to a piercingly honest analysis from Wall Street. The article on SeekingAlpha.com, titled We-re Big Fans Of Comcast's Cash-Flow Generation captures one of the major policy failures of our time:
Comcast's traditional Cable Communications continues to grow and generate copious cash flow. Video revenue, Xfinity and other cable TV products, grew 2.8% to $5 billion, while High-Speed Internet revenue grew 8.9% to $2.4 billion. 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. Further, we believe that both services have become so sticky and important to consumers that Comcast will be able to effectively raise prices year after year without seeing too much volume-related weakness.
Wow.
SeekingAlpha.com, describes itself as "…the premier website for actionable stock market opinion and analysis, and vibrant, intelligent finance discussion."
We want to empower local businesses and communities to control their own destiny. Monopolistic telecommunications companies, with their Goliath market share, Wall Street priorities, and armies of lobbyists continue to attack local control and self-reliance. They are extracting assets from Main Street and shipping it to Wall Street.
Yet we see the FCC, Congress, and many states pretending that the public interest is best served by giving more power to these massive companies. And we will continue to hear industry-funded think tanks claiming that broadband has robust competition and should be subject to less public oversight. Coming soon to an op-ed page near you.Photo courtesy of JSquish via Wikipedia Commons
Mediacom Continues Obstructing Rural Broadband Rollout in Lake County Minnesota
The Economics of the Google Gigabit
Lesson 1: Google built its own network. It isn't leasing connections or services from big telecommunications companies. Building your own network gives you more control -- both of technology and pricing. Lesson 2: Google uses fiber-optics. These connections are reliable and have the highest capacity of any communications medium. The homes in Kansas City are connected via fiber whereas Time Warner Cable, CenturyLink, and others continue to rely on last-generation technologies because they are delaying investment in modern technology to boost their profits.Others have already followed these lessons but are not able to offer their gig for such a low prices. To understand why, let's start with some basics. I'm hypothetically starting Anytown Fiber Net in my neighborhood and I want to offer a gig.
Harold Feld Examines The Meaning Behind The Verizon/SpectrumCo/Cox Deal
Several months ago, we wrote this post but it got lost in the system. We think it still worthwhile, so here it is.
The word "cartel" drums up many negative annotations - drug cartels, oil cartels. Never anything positive, such as bunny cartels or chocolate cartels. Harold Feld (of Public Knowledge) explains the emergence of another cartel in My Insanely Long Field Guide To The Verizon/SpectrumCo/Cox Deal, on his Tales of the Sausage Factory blog. This is great tutorial on how the deal came about and what it can mean for the future of broadband.
Rather than chocolate, drugs, oil, or bunnies, the product in question is telecommunications services. At the heart of the cartel are the familiar names: Verizon, Cox, and SpectrumCo. The latter being a consortium of Comcast, Time Warner Cable, and Bright House. All the big hitters in telecom are involved in a way that is veiled, secretive, and not good for competition.
"It's almost as if your companies got in a room together, and you agreed to throw in the towel and stop competing against each other," Sen. Al Franken to representatives from Verizon and the cable companies at the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights, March 21, 2012.
Feld's investigation begins with the licensing and collecting of spectrum by SpectrumCo but ends with a more practical look at how these big hitters have decided that it is better to join forces than to compete. Side agreements, secretive multi-layered entities, and threaded loopholes keep the FCC at bay. This begins as an article about telecommunications, but quickly expands into an antitrust primer. The most alarming facet of this situation is that the product in question is information.
Joel Kelsey of Free Press testified at that same committee, warning how this deal will compromise access, quality, and affordability to broadband in America and how drive us further behind the rest of the world.
Update:
On August 16, 2012, the Department of Justice announced that it approved the deal with changes. Citing:
Usage Based Billing - Time Warner Cable Latest Attempt to Increase Prices
Time Warner Cable's announced intention to expand its usage based billing for broadband has recently received a little media attention. The company currently uses tiers for customers in parts of Texas, allowing customers to sign on to a plan which limits the amount of usage per month. If they come in under the plan amount (currently 5 gigabytes), they get a $5 dscount. If they go over, they are charged $1 per gigabyte over the tier limit.
One commentary we find particularly insightful is from Susan Crawford, "The Sledgehammer of usage-based billing." Crawford not only addresses TWC's billing change, but critiques New York Times' "Sweeping Effects as Bradband Moves To Meters" by Brian Stelter.
Crawford points out several statements in Stelter's article that sound rational on paper, but are actually "holes" in the fabric of reality. Based on what we have seen from companies like Time Warner Cable, we concur.
Stelter justifies Time Warner's decision to shift to usage-based billing based on the fact that its competitors are doing it. Crawford points out that:
Time Warner does not have competitors among cable companies – if by competition you mean a cable distributor that could constrain Time Warner’s pricing or ability to manage its pipe for its own purposes. Time Warner’s DOCSIS 3.0 services do compete with Verizon’s FiOS, but FiOS is available in just a tiny part of Time Warner’s footprint. The major cable distributors long ago divided up the country among themselves.
The Stelter article raises the issue of high usage and congestion, their connections to the usage tier billing model, and claims that there is no other way to handle high usage. Crawford calls out this error as it relates to the new billing plan:
Cable distributors have a choice: They could maintain the 90+ % margins they enjoy for data services and the astonishing levels of dividends and buybacks their stock produces, or they could rearchitect their networks to serve obvious consumer demand. But they are in harvesting mode, not expansion mode. And no competitor is pressuring them to expand.