Sonic is a small ISP that competes brilliantly with the big guys - so they're trying to throttle its business

["Dave Farber" <farber () gmail com>]

> Begin forwarded message:
>
> From: Dewayne Hendricks <dewayne () warpspeed com>
> Subject: [Dewayne-Net] Sonic is a small ISP that competes brilliantly with the big guys - so they're trying to 
> throttle its business
> Date: July 7, 2018 at 4:58:07 PM GMT+9
> To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>
> Reply-To: dewayne-net () warpspeed com
>
> [Note:  This item comes from reader Randall Head.  DLH]
>
> Sonic is a small ISP that competes brilliantly with the big guys — so they're trying to throttle its business
> By MICHAEL HILTZIK
> Jul 5 2018
> <http://www.latimes.com/business/hiltzik/la-fi-hiltzik-sonic-isp-20180706-story.html>
>
> Dane Jasper says he doesn’t think that big telecommunications companies AT&T and Verizon are deliberately trying to 
> put his company out of business.
>
> “I think they haven’t noticed us,” he said.
>
> Perhaps he’s just being charitable. For years, the big companies have striven to hamstring competition across the 
> telecommunications landscape. And last month, they essentially asked the Federal Communications Commission to finish 
> the job by repealing a rule granting competing phone and internet companies wholesale access to their copper-wire 
> phone infrastructure. The industry petition argues that the rule is an “intrusive” regulation that has outlived its 
> usefulness.
>
> Jasper says the opposite is true — that the access to copper, which is guaranteed by a 1996 law, is what has enabled 
> his small regional internet firm and others like it to continue rolling out high-speed broadband services to their 
> customers, in competition with the big firms.
>
> Jasper, 45, is the co-founder and CEO of Sonic, a private Santa Rosa company that provides more than 100,000 
> customers in about 125 California communities phone and internet service at a flat rate starting at $40 a month. 
> Don’t let the low price fool you: Sonic is praised for its customer service, delivers internet speeds of up to 1 
> gigabit to some customers, and receives top marks for its privacy policies.
>
> As a private firm, Sonic doesn’t disclose revenue or earnings. But with steady expansion it now employs nearly 500 
> people, many of them sharing a bustling workplace with their astonishingly well-behaved dogs in a Santa Rosa office 
> park.
>
> About half of Sonic’s customers receive DSL broadband service over phone lines Sonic rents from AT&T. But the 
> company’s future rests with the fiber it has been laying, starting with five Northern California cities — San 
> Francisco, Berkeley, Albany, Brentwood, and Sebastopol. In those cities phone and internet service now is available 
> to an estimated 182,000 homes or commercial establishments, with further expansion in the cards.
>
> Sonic and other small ISPs like it owe their business models to an obscure provision of the 1996 Telecommunications 
> Act. The act required the major phone companies to lease their copper wire infrastructure, on which phone service 
> traveled, to competitors at a regulated price.
>
> This allowed hundreds of competitive companies, known as CLECs, for “competitive local exchange carriers,” to 
> flourish by offering cheap, innovative phone service and expanding into DSL — that is, phone-line-based broadband 
> access. Some, such as Sonic, have used revenue from their phone and DSL customer base to finance expansion into fiber 
> internet service.
>
> The telecom industry’s petition, which was filed in May via USTelecom, its Washington trade group, would end the 
> leasing rule within 2 1/2 years, cutting off that revenue stream. (The trade group has dozens of members among local 
> and national telecom firms, but its four biggest members are AT&T, Verizon, CenturyLink and Frontier Communications.)
>
> The industry’s argument for dropping the leasing rule is that residential CLECs are an insignificant part of the 
> business now and are shrinking at a rapid clip. “There is effectively no remaining … competition in that 
> marketplace,” USTelecom said in its filing.
>
> “That’s flat-out wrong,” Jasper told me. “We’ve got 50,000 California households connected, getting innovative 
> broadband service that in the vast majority of cases is faster than the incumbent offers.” Another 50,000 customers 
> connect through other means, including fiber.
>
> Sonic and other small ISPs have been fighting back in Congress and before the FCC. In a letter to Sens. John Thune, 
> (R-S.D.) and Bill Nelson (D-Fla.), chairman and ranking member of the Senate Committee on Commerce, Science and 
> Transportation, they pointed out that the industry’s petition would stifle fiber deployment, cut off rural 
> communities from the broadband service they provide, and jack up rates. “Our companies build state of the art, 
> Gigabit speed fiber networks,” Jasper and 15 fellow CEOs wrote, “and in many cases, supply the only network access 
> for communities that have been abandoned by incumbent providers.”
>
> In late June, Jasper and his colleagues visited FCC commissioners to argue that competition is not yet nearly robust 
> enough to cut off the CLECs. They got polite hearings from the commissioners or their staffs, but came away with a 
> strong sense of how the deregulatory environment enveloping Washington is oriented toward making the big and rich 
> players bigger and richer.
>
> The big telecom firms are irked at being saddled with a regulation that doesn’t apply to their main broadband 
> competitors, cable firms. But this argument only underscores how lack of regulation and competition has left the U.S. 
> with some of the slowest, least reliable and most expensive broadband service in the developed world.
>
> [snip]
>
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