Broadband Battles

Broadband experts gathered in Washington, D.C. this week to discuss the future of high-speed Internet access. Much of the talk centered on Texas, where a major battle recently took place between telecom companies and cable firms.

The focus of the war was a Texas bill that would have allowed telecom companies like SBC and Verizon to offer cable services to consumers over broadband without having to negotiate franchises with each municipality in the state. Instead, the bill would have allowed the telcos to negotiate and obtain a single statewide franchise, making it easier and faster to roll out their services. The cable companies, which do not welcome the competition, fought the bill and won.

Customers Lose

This win was a defeat for consumers and perhaps even for the cities that think they are better off wheeling and dealing with communications executives. Consumers often lack a choice of more than one cable provider and, as a result, prices have remained high and innovation slow. If new choices like Verizon’s Fios, a state-of-the-art fiber optic network, were allowed to roll out faster, that would change.

Kathryn Brown, Senior Vice President of Public Policy, Development and Corporate Responsibility at Verizon, showed a video in which the company pitches the idea of fast broadband service combined with cable television. The video also demonstrates new services such as the ability to teleconference with offsite family members while watching a television show.

SBC’s project Lightspeed offers similar functions, such as managing profiles offsite and allowing parents to block certain channels from children. This is a much better solution than the clunky and expensive V-chip government proposal that was being pushed a few years back as a way to protect kids. Meanwhile, it’s not just consumers that have lost in the Texas battle.

City bureaucrats may have also missed a golden opportunity as a result of not looking far enough into the future. That is, although government representatives don’t want to lose the money and power they obtain through the franchise process, they may have gained more revenue and prestige by allowing the networks to be put in place.

Benefits To Reap

If companies like Verizon and SBC deploy their technology and grow, cities and states will reap tax receipts from the activity as well as from the new jobs that are created. And don’t forget the glamour factor.

Cities all over the country, including San Francisco, Philadelphia, and New York, are moving towards running their own broadband networks. They claim that such networks would facilitate economic activity and make the cities cooler places to live. The cities also argue that the private sector isn’t moving fast enough to deploy technology. The irony here should be evident.

Verizon and SBC are fighting hard to get their feet in the door because of the large market and the competition they face. And if regulators take advice from some of the Broadband Policy Summit’s participants, even more competition is on its way. Thomas Hazlett, a former FCC chief economist and longtime telecom scholar, discussed spectrum allocation.

Policy Reform

“If there was more spectrum, we’d have more mobile and fixed mobile competition,” he said. He’s right, and that’s probably the last thing the cable and telecom companies want to hear.

Indeed, it would be good for consumers and the economy if markets were opened up and freed of the restrictive legacy of government regulations — and this means treating all types of broadband providers in a similar manner. Although many failed to recognize it, that was a flaw in the Texas bill.

While the measure would have helped consumers by opening up the cable space to greater competition, it still allowed telecom and cable companies to be treated differently by government. In the long run, that’s not a good situation because it distorts the market, picking winners and losers through regulation instead of merit. A better solution would be a national policy that treats all broadband providers the same way, with a light regulatory touch.

Congress is currently out of session, but when representatives return they should make communications reform a priority. Technology has forced major changes in the marketplace and it’s time for public policy to follow suit.

Sonia Arrison, a TechNewsWorld columnist, is director of Technology Studies at the California-based Pacific Research Institute.

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