This morning, I sat through most of a presentation/discussion of the draft Portland Broadband Strategic Plan with a number of invited telco industry representatives at City Hall’s Council Chambers. The representatives were from CenturyLink (formerly Qwest), Comcast, EasyStreet, Integra, TW Telecom, LS Networks, and Don Westlight as a representative from NWAX, a local peering exchange. They all said predictable things. CenturyLink thought the public sector should stay out of the infrastructure business. They all touted their highest speed capabilities without mentioning any pricing or terms-of-service constraints. The competitive companies talked about their ability to bring metro ethernet to businesses. They all agreed that for business services, Portland was a competitive market. When asked directly about residential competition, they talked about how competitive the business market was.
Rich Bader of Easy Street made the obvious point that businesses care about their finances and making money, and that the public policy wants infinite capacity for free for its productivity benefits to society, and that everybody should recognize that tension. There was a discussion about access to open trenches for installing conduit. Someone suggested that when someone gets a permit for a trench, that notice should be given to other franchisees so that they have the chance to drop conduit into those trenches while they are still open. Don Westlight pointed out the free-rider effect might cause people to stand around waiting for someone else to dig the trench under those circumstances and that there should be a way of sharing the costs of digging the trench. There was a discussion about access to buildings, and how some property owners want fees from the carrier to serve tenants in their building. Someone said the way to get more development of infrastructure was to keep costs low, by avoiding redundant work, or by building in access when construction costs are relatively low.
I left with the feeling that these companies had touched on the problem, but had not generalized it broadly enough. They are all talking about figuring out how to serve a customer who lives in Beaverton and wants to get to the airport, and figuring out the cheapest way to build a highway in between for their customer to use. The obvious answer is, SHARE THE INFRASTRUCTURE! Build an infrastructure with massive capacity and share access to it. All of these companies are working around the broken model that they have inherited of dinosaur-like incumbents with a lock on the infrastructure. The smaller competitive companies are only filling the holes where the dinosaur can’t or won’t reach, where the need is so great that people with resources are willing to pay through the nose.
After listening to them talk, I think the case is even stronger for public ownership of the last mile infrastructure. It’s cheapest, because it means building one network of fiber, and not a dozen. And it means equitable access to the massive capacity that infrastructure provides.
3 thoughts on “Incumbents weigh in predictably”
Excellent article, Russell and I agree with everything except for one small point in the last paragraph. I don’t think the last mile infrastructure has to be public. It just has to be separate (not owned by a single telco or other communications company).
There are plenty of examples where the actual fiber running around the city is owned by a private company run like a utility, who leases out bandwidth on it to a large number of ISPs and other users. Wellington, NZ is but one example.
I would be happy either way (the fiber infrastructure either private or public). The main point is that the infrastructure has to be open to any business to use, so that there is competition.
I agree in theory. However, in the US regulatory and legal context, there doesn’t seem to be as much chance of getting a private company to operate in the way you suggest over the long term. Google is another counter-example, a private company that promises open-access fiber for Kansas City, Kansas, which is why their project was so attractive to so many cities last year. And you are right that the bottom line is really the open-access and not the public ownership. I just think that public ownership is the most reliable and likely way to get open-access.
Just as a followup, I spoke to a Google Fiber representative in the OSCON expo hall last week and he told me that Google is *not* doing open-access in Kansas City, claiming that they couldn’t find partners. I don’t know anything about the ISP landscape in Kansas City, but in Portland there is still a community of local ISPs that you’d think would love to move customers off of twisted pair.