Dane Jasper And Broadband Monopolies

sonic.net

If you live anywhere in the U.S. other than a big city, you likely have one choice – and only one choice – for broadband service.

If you live in a rural area, there is a good chance that you cannot get broadband service of any kind.

Dane Jasper, founder and CEO of Sonic.net, wrote an article a few days ago that provides a useful reminder of how the U.S. got to this position, where we lag behind many other countries in broadband penetration and speeds.

In a few words: there was robust competition in the 90s. The copper lines to your house were recognized as a natural monopoly, since you only have one phone line to the house. Regulations ensured that competitors had uniform access to the copper lines; AT&T was required to permit competitors to offer DSL service. DSL flourished. A similar competitive structure was set up in Europe and continues to this day, one of the reasons that European broadband has continued to drive ahead.

The Bush administration dismantled the regulatory scheme and gave complete control of every market in the U.S. to either a giant telco or a giant cable company, with all other competitors blocked out. The article uses the term “intermodal competition,” the idea that it’s sufficient to have a single telco competing with a single cable company:

With the appointment of FCC Chairman Michael Powell, and lobbying by incumbents, a new theory was born: Intermodal competition was better than true open competition. The modes: Cable, Telco, Power Line, Satellite and Wireless. Each, an effective state-created monopoly. This was done under the banner of the free market, a topsy-turvy way to look at the elimination of actual competition.

With the shift away from the 1996 Act’s open competition model toward this constrained intermodal goal, the FCC began to make a series of decisions to clear the decks of meaningful competition, freeing Cable to spar with Telco, with Broadband over Power Line and Wireless. Satellite would bring up the rear for those unlucky enough to live in a region not worth investing in by the designated modal monopoly.

To create these modal monopolies, the FCC began to foreclose meaningful competition.

Although the scheme was theoretically built on five “competing” technologies, three of them were not and are not meaningful for technical and economic reasons: broadband over power line, community-wide wireless service, and satellite service were always going to be non-starters.

The effect was – as intended – the elimination of competition and the creation of a “duopoly” between the telco and cable company in your area, who have no incentive to deliver service to outlying areas.

The effect has been a dramatic change in the U.S. for broadband; other countries are surging forward with steadily increasing availability and speeds, while the U.S. stagnates. If you do not currently have service,  you are very unlikely to get it. I’m not aware of anywhere that new broadband service has been delivered in Sonoma County in the last eight years. It’s not just rural areas; there are holes in service in the middle of town.

Sonic.net is one of the few remaining independent ISPs. They survived the crash by smart cash handling and forward-looking decisions about deploying equipment around the fringes of the regulatory environment, as well as providing the best customer support of any company in any industry. Although Sonic is home-grown in Sonoma County, they have service available in many places in California – you should always find out whether Sonic can deliver broadband before you call AT&T.