Broadband Briefings


Published by NetAction Issue No. 1 August 30, 1999
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IN THIS ISSUE:

Pipe Dreams: Will Cable Be The Favored Technology?
About Broadband Briefings

Pipe Dreams: Will Cable Be The Favored Technology?

The current debate over "open access" to high-speed cable Internet service is premised largely on the assumption that consumers are going to favor cable broadband over competing technologies like digital subscriber line (DSL) and wireless. AT&T is certainly betting that this is what consumers want, to the tune of more than $120 billion. And so, it seems, are many of AT&T's competitors. Along with some consumer groups, they are urging state, local, and federal policy makers to give them access to AT&T's cable network when it's upgraded to deploy broadband.

But the assumption that cable broadband is going to be the favored choice for high-speed Internet access needs to be closely scrutinized. There are both practical and technical reasons why cable broadband might not wind up being the preferred technology. And if cable doesn't wind up being the preferred technology, the "open access" debate may prove to be largely irrelevant.

Proponents of forced access have largely ignored one of the most obvious practical hurdles that cable operators face in building a market for broadband cable Internet access: cable companies don't have many fans. So, for starters, AT&T and other cable operators are faced with a formidable public relations barrier. In many communities, local franchise authorities have been besieged for years by irate cable customers complaining about the cost and/or quality of cable television service. If these disgruntled cable customers have a choice, how likely is it that their local cable company will be their first choice when they decide to sign up for broadband Internet access?

AT&T's decision to put its "brand" on TCI's cable facilities suggests that the company understands the public relations challenge that it faces. If TCI's name generated a positive response from consumers, it's a safe bet that AT&T wouldn't be in such a hurry to make the change.

Let's assume that AT&T's marketing folks are wildly successful in transferring the AT&T "brand" to TCI cable, so TCI's reputation isn't a factor in consumer decisions about where to go for high-speed Internet access. There's another very practical issue that some of the forced access proponents seem to be neglecting: the vast majority of Internet users are already getting online access from their telephone company. Consumers will have to make an affirmative decision to switch to cable. How likely is it that consumers will make that switch?

As noted above, AT&T is betting a bundle that consumers will make the switch. And there is no doubt that many consumers will prefer cable over phone access. But the deployment of broadband cable has motivated the regional Bell monopolies to speed up the introduction of DSL, a competing technology being offered by the phone companies and some of their competitors.

Moreover, competition from cable broadband has resulted in dramatic reductions in the cost of DSL. At a hearing before the California Legislature earlier this year, state Senator Debra Bowen noted that Pacific Bell and GTE had dropped the price of DSL service from $89.95 to $39.95 when cable modem competition was introduced by the partnership of TCI and @Home. With competitive pricing, it's likely that many consumers will opt for DSL.

Beyond these practical issues, there is a technical limit to broadband cable that will most certainly be a factor in its marketability: transmission slows down as more users go online. Cable broadband may be wildly popular with the first thousand customers, but will customer number 100,001 be equally satisfied? With the present technology, that's doubtful.

The point is, it's just too soon to be making assumptions about which technology will be most popular with consumers. In its 1999 report to Congress, the Federal Communications Commission (FCC) concluded that it was not necessary to regulate access to broadband cable at present because competitive broadband technologies were already being developed and deployed. We agree with the FCC's conclusion and support the Commission's wait-and-see approach.

Earlier this month, the FCC filed a "friend of the court" brief with the U.S. Court of Appeals for the Ninth Circuit, in support of AT&T's appeal of a lower court's decision upholding Portland's right to require "open access" as a condition for approval of the transfer of TCI's cable franchise to AT&T. The brief, at: http://www.techlawjournal.com/courts/portland/19990816fcc.htm, provides an overview of the Commission's position on the issue.

The FCC also has a Resource Guide at: http://www.fcc.gov/broadband/.


About Broadband Briefings

Broadband Briefings is a free electronic newsletter, published by NetAction to promote policies that encourage rapid and widespread deployment of high-speed Internet access. NetAction is a California-based non-profit organization dedicated to promoting use of the Internet for grassroots citizen action, and to educating the public, policycmakers, and the media about technology policy issues.

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