While the Net Neutrality Fight Continues, AT&T and Verizon are Opening a New Attack on ISP Competition

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

Begin forwarded message:

> From: Dewayne Hendricks <dewayne () warpspeed com>
> Date: June 10, 2018 at 5:49:10 AM EDT
> To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>
> Subject: [Dewayne-Net] While the Net Neutrality Fight Continues, AT&T and Verizon are Opening a New Attack on ISP 
> Competition
> Reply-To: dewayne-net () warpspeed com
>
> While the Net Neutrality Fight Continues, AT&T and Verizon are Opening a New Attack on ISP Competition
> By ERNESTO FALCON
> Jun 8 2018
> <https://www.eff.org/deeplinks/2018/06/while-net-neutrality-fight-continues-congress-and-states-att-and-verizon-are>
>
> In 1996, Congress passed the Telecommunications Act in order to inject competition into the telephone market and set 
> the stage for a nascent commercial Internet. Last month, US Telecom, the trade association of AT&T and Verizon, filed 
> a petition with the Federal Communications Commission (FCC) to repeal one of the central requirements of the ’96 Act 
> that has promoted competition. That requirement being that incumbent telephone companies share their copper line 
> infrastructure at regulated rates with to lower the barrier of entering an incumbent’s market. If granted, incumbent 
> wireline telephone companies will be free to raise prices or simply disconnect competitors’ access to their 
> infrastructure and potentially jeopardize what the small amount of remaining competition that exists in high-speed 
> broadband.
>
> While copper wire infrastructure may strike people as the infrastructure of yesterday, its existence and the legal 
> rights to access it remain essential for competitive entry into the high-speed broadband market. This is because it 
> is one of the only remaining ways a new company can gain customers to then leverage to finance fiber optic 
> deployment. Should the FCC grant the petition, the growing monopolization of high-speed broadband above 25 Mbps where 
> more than half of Americans have only one choice will likely become worse.
>
> Shared Copper Wire Access Promotes Private Competitive Gigabit Fiber Networks
>
> Congress envisioned that forcing incumbent telephone companies to share their infrastructure with new market entrants 
> would spur competition. It worked fairly well in terms of facilitating the creation of hundreds of new companies 
> known as Competitive Local Exchange Carriers (CLECs), but in the years that followed financial shocks (namely the 
> dot-com bubble) and other challenges resulted in many of these companies to go bankrupt. The small number of CLECs 
> that remain continue to rely on these sharing agreements as a means to help finance their growth to compete and most 
> importantly help finance their own fiber optic deployments.
>
> Compounding the importance access to copper wire infrastructure represents is the fact that the FCC explicitly 
> exempted incumbent fiber optic infrastructure from sharing requirements in 2005 at the advent of Verizon FIOS. The 
> history that has followed the 2005 decision to exempt fiber optics from infrastructure sharing requirements pretty 
> clearly demonstrates limited success in a handful of urban markets, but ultimately more than half of Americans now 
> with a monopoly choice (which one should mark down as a failure in policy).
>
> How Does Access to Copper Infrastructure Lead to Competitive Fiber Optic Deployment?
>
> Entering into the ISP market is very difficult. This is because deploying the physical infrastructure to create an 
> ISP is expensive even though maintaining the ISP once it has been deployed is a substantially lower cost. It is the 
> high sunk costs of deploying fiber optics that has resulted in the growing lack of competition Americans have in 
> high-speed broadband because very few companies can successfully pull off entering the market. Here is where access 
> to copper line infrastructure still remains important in at least the markets that have CLECs reliant on sharing 
> rights.
>
> Generally, there are three primary means to deploying competitive fiber optic high-speed broadband in today’s market:
>
> 1) Have a pre-existing customer base that can be leveraged to obtain the finances necessary to absorb the high sunk 
> costs of fiber optic deployment.
>
> 2) Have deep pockets or other means that can be leveraged to obtain those dollars to deploy.
>
> 3) Already have the fiber optic infrastructure deployed for purposes other than broadband and convert it over to 
> broadband.
>
> Many cities that launch their own community broadband service have some combination of 2 and 3 with their utility 
> company while incumbent telephone companies like Verizon FIOS (which stopped deploying fiber years ago) started off 
> with 1 and 2. A competitive entrant like Google Fiber had 2 and 3, but even they have stopped expanding their fiber 
> build. For any competitors or new entrants that are small by comparison, the access to copper infrastructure is 
> effectively the bridge to get customers and build a base that can be leveraged for fiber deployments (option 1). 
> Without it, one should expect many small competitors to effectively die off in the broadband market if they are 
> unable to obtain the financing necessary to deploy. With fewer companies deploying competitive fiber, one should 
> expect the regional monopolization of high-speed broadband to get worse in the U.S. market.
>
> [snip]
>
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