"OPEN ACCESS" BATTLE SHEDS LIGHT ON POTENTIAL NEW PRICING MODELS FOR BROADBAND and comment

[Dave Farber <dave () farber net>]

> Date: Tue, 29 Jul 2003 12:29:01 -0700
> From: Dewayne Hendricks <dewayne () warpspeed com>
>
>
>
> "OPEN ACCESS" BATTLE SHEDS LIGHT ON POTENTIAL NEW PRICING MODELS FOR
> BROADBAND
>
> During testimony at last week's House hearing on the "Regulatory Status of
> Broadband," support for bit-rate pricing for high-speed Internet access came
> from an unlikely party to the debate. Amazon.com vice president Paul
> Misener, who has led a coalition of Internet content creators such as
> Microsoft and Disney to prevent phone and cable networks from "impair[ing]
> consumer access to Internet content," said that Amazon supported the right
> of ISPs "to charge their customers on the basis of how many bits they
> receive or transmit." Misener's Coalition of Broadband Users proposal is
> seen as "modest" relative to the "open access" solution advocated by the
> Center for Digital Democracy, the ACLU and many other public interest
> groups, which would require cable and phone networks to support various
> service providers while being prohibited from discriminating against certain
> content or applications. At the hearing, representatives for Verizon and the
> cable industry opposed any form of open access -- even the coalition's
> proposal. Some fear that without safeguards, network owners will have
> incentive to block access to certain content, placing limits on free speech.
>
> SOURCE: Center for Digital Democracy
> <http://www.democraticmedia.org/news/washingtonwatch/payAsSurf.html>

> Date: Tue, 29 Jul 2003 19:04:37 -0400
> From: "Faulhaber, Gerald" <faulhabe () wharton upenn edu>
> Subject: RE: comments?
> To: Dave Farber <dave () farber net>
>
>
> Several issues are in this mix: (i) requiring cable/DSL providers to
> open their conduits to any and every ISP (or even just a few), which is
> typically called "open access". (ii) requiring that all ISPs provide
> customers with access to all Internet content.  And (iii) charging for
> use of the conduit.
>
> The simplest issue is (iii): conduit providers can charge for their
> services any way they want to, constrained only by competition.  In the
> mid-1990s, AOL and Compuserve were forced away from per minute charges
> to per month charges.  Cellphone operators have gone to a
> bucket-of-minutes approach.  The public really doesn't like per minute
> charges, and anyone in this business that insists on doing it that way
> is going to lose.  Only two competitors?  Wait until either or both
> starts charging by the minute or by the bit.  You will see serious
> competitive entry, I guarantee it.
>
> Item (ii) is more interesting; everyone is fearful that BB ISPs will
> limit users to a "walled garden," AOL's phrase, restricting their access
> to the wild west Internet.  Well, this has actually never happened,
> isn't happening today, and it is in no one's interest to restrict
> access, despite the fears.  What *is* in the ISPs' interest is to do
> "preferred provider" deals (such as AOL had done) that make it easy to
> go to AOL's preferred news provider, although a customer can go to the
> New York Times with somewhat more effort.  But even on AOL, that most
> "walled garden-ish" of ISPs, you can still go wherever you want and
> bookmark any site.  Before we come up with a soluton of required access
> to all websites, let's make sure there's a problem to which this is the
> solution.  So far, this is a non-problem; why do we need a law to solve
> a non-problem?  Because somebody thinks that someday somewhere this
> might happen?  Bad idea.
>
> Item (i) is trickier, especially because DSL is required to carry any
> ISP that requests it and cable is not.  Cable is resisting going this
> route (I think it is technically more difficult to have multiple ISPs
> sharing the cable IP channel) and the RBOCs want "a level playing
> field," i.e., either cable gets open access rules or the RBOCs are
> relieved of them.  Public policy wonks are concerned that not having
> open access will shrink the ISP market; they are right, but so what?
> This is a commodity market in which all ISPs (except maybe AOL) provide
> pretty much identical service and identical prices (with some
> discounters thrown in at $14.95/mo for dialup); tell me why I am better
> off with 7,000 ISPs rather than, say, 50.  In my view, whether we have
> open access or not is really not going to matter much; broadband service
> will not change either way, the ISP industry will consolidate
> drastically, and the price of BB service will be driven by the conduit
> price, not the the ISP price.  Today, cable customers (with a captive
> ISP) are as well off as DSL customers (with ISP choice)(which may not be
> all that good;-).  This is an issue with lots more heat than light;
> "open access" again doesn't solve a problem that I and other customers
> have.  It does solve a problem that ISPs have, which is how to support a
> market structure with 7,000 ISPs.  But that's a business problem, not a
> public policy problem.  The last thing we need is a law to solve a
> problem none of us (except ISP owners) have.
>
> Professor Gerald R. Faulhaber
> Business and Public Policy Dept.
> Wharton School, University of Pennsylvania
> Philadelphia, PA 19104
>
>
> -----Original Message-----
> From: Dave Farber [mailto:dave () farber net]
> Sent: Tuesday, July 29, 2003 4:31 PM
> To: Faulhaber, Gerald
> Subject: comments?
>
>
>
> >Date: Tue, 29 Jul 2003 12:29:01 -0700
> >From: Dewayne Hendricks <dewayne () warpspeed com>
> >
> >
> >
> >"OPEN ACCESS" BATTLE SHEDS LIGHT ON POTENTIAL NEW PRICING MODELS FOR
> >BROADBAND
> >
> >During testimony at last week's House hearing on the "Regulatory Status
>
> >of Broadband," support for bit-rate pricing for high-speed Internet
> >access came from an unlikely party to the debate. Amazon.com vice
> >president Paul Misener, who has led a coalition of Internet content
> >creators such as Microsoft and Disney to prevent phone and cable
> >networks from "impair[ing] consumer access to Internet content," said
> >that Amazon supported the right of ISPs "to charge their customers on
> >the basis of how many bits they receive or transmit." Misener's
> >Coalition of Broadband Users proposal is seen as "modest" relative to
> >the "open access" solution advocated by the Center for Digital
> >Democracy, the ACLU and many other public interest groups, which would
> >require cable and phone networks to support various service providers
> >while being prohibited from discriminating against certain content or
> >applications. At the hearing, representatives for Verizon and the cable
>
> >industry opposed any form of open access -- even the coalition's
> >proposal. Some fear that without safeguards, network owners will have
> >incentive to block access to certain content, placing limits on free
> >speech.
> >
> >SOURCE: Center for Digital Democracy
> ><http://www.democraticmedia.org/news/washingtonwatch/payAsSurf.html>
> >
> >Archives at: <http://Wireless.Com/Dewayne-Net>
> >Weblog at: <http://weblog.warpspeed.com>

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