Broadband Briefings


Published by NetAction Issue No. 3 October 19, 1999
Repost where appropriate. Copyright and subscription information at end of message.

IN THIS ISSUE:

Crystal Balls and Cable Calls
Congressman Campbell Wants Your Advice
About Broadband Briefings

Crystal Balls and Cable Calls

Proponents of "open access" contend that regulators must act immediately to prevent cable companies from securing monopoly control of high-speed Internet access. It's easy to be skeptical when these concerns are voiced by the Bell and GTE monopolies and America Online (AOL), with its 60% share of the Internet Service Provider (ISP) market. These companies are just protecting their own market share from the threat of competition. Whining to regulators about unfair competition is what the Bells and GTE do best, and AOL is catching on fast.

But the dire warnings of a new cable monopoly are also being voiced by No Gatekeepers, an AOL-funded coalition that includes several consumer groups. Last week, five of these groups once again declared that a cable monopoly was imminent, this time in a open letter to Chairman William Kennard of the Federal Communications Commission (FCC).

In their letter to Kennard, the consumer groups criticized the chairman's plan to release a staff report on the status of broadband deployment. The signers complained that the report, which was released the same day, might dissuade local authorities from forcing cable companies to provide competitors' with access to their broadband networks.

If the report does dissuade local franchise authorities from regulating Internet access, it will go a long way toward ensuring the development of vigorous competition in the broadband Internet market -- and also toward opening the door to competition in local phone service.

Consumers will benefit on both counts.

The report, "Broadband Today," updates the agency's January 1999 report to Congress on the status of deployment of advanced telecommunications services, as required in Section 706 of the Telecommunications Act of 1996. Like the earlier report, "Broadband Today" concludes that the market is developing on its own and that at present there is no need to regulate access to broadband Internet service. NetAction agrees with this conclusion and supports Chairman Kennard's decision to continue monitoring developments in the industry.

A PDF version of the report is on the web at: http://www.fcc.gov/Bureaus/Cable/Reports/broadbandtoday.pdf. For other formats, see: http://www.fcc.gov/Bureaus/Cable/News_Releases/1999/nrcb9017.html.

Proponents of "open" access have argued that without government intervention, cable companies will monopolize high-speed Internet access, replacing the Net's historical openness with corporate gatekeepers which will control content and steer users to commercial sites. These concerns are based largely on the proponents' past experience with cable television programming.

The problem with this reasoning is that the Internet is not television, as anyone who uses the Internet knows. Cable broadband users, like customers of dial-up ISPs, can access any Internet web site with a single click of the mouse. Nor is the Internet like traditional monopoly telecommunications services. The Telecommunications Act of 1996 imposed access requirements on local monopoly phone companies in order to promote competition in the local phone service market. Cable broadband is a different market. Imposing these same requirements on cable broadband providers will discourage competition.

According to the FCC's latest estimates, only about 3.5% of Internet users subscribe to any type of broadband Internet service. While that number is expected to increase over the next five years, market analysts estimate that dial-up Internet service will still have the major share of the market (51%) five years from now. The FCC also looked at the dramatic increase in digital subscriber line (DSL) deployment since cable broadband became available. DSL deployment would not have expanded so rapidly without competition from cable broadband.

When the facts are carefully examined, as they are in the FCC's new report, there should be no doubt that competition is emerging in high-speed Internet service. Cable broadband, DSL, and wireless broadband all have minuscule market shares right now. In today's market, they are all just competitive alternatives to the dial-up Internet service used by more than 95% of online consumers.

The FCC is clearly aware of cable's potential to monopolize the market. That's why regulators are continuing to monitor the industry and prepared to step in if conditions warrant it. For now, this represents the most responsible course of action.

But regulating broadband access now, on the theory that a monopoly might develop later, is bad public policy. It won't help consumers, but it will surely help the anti-competitive interests of local phone monopolies and the nation's dominant Internet service provider. It isn't access to broadband cable that needs to be opened; its the eyes of "open access" proponents whose position supports the continued monopolization of local phone service by GTE and the Bells.


Congressman Campbell Wants Your Advice

Because his district is in the heart of Silicon Valley, Rep. Tom Campbell (R-15) has a strong interest in legislation related to the Internet. In a recent weekly newsletter to his constituents, Rep. Campbell solicited his constituents' views on two bills which would affect the growth and development of the Internet. The bills, H.R. 1685 (Boucher) and H.R. 1686 (Goodlatte) contain provisions that will have an impact on deployment of high-speed Internet access. Readers who reside in Rep. Campbell's district should urge him to oppose both bills.

Both H.R. 1685 and H.R. 1686 are characterized by their authors as bills that would encourage growth of the Internet by imposing access obligations similar to the conditions imposed on monopoly providers of local phone service in the Telecommunications Act of 1996. But treating competitive broadband providers like monopoly telecommunications providers is contrary to the Act's intent, which is to promote increased competition and consumer choice.

Rep. Campbell needs to hear from constituents who support the development of a competitive market for broadband Internet service. The important points to communicate are:

Rep. Campbell can be contacted by phone (202-225-2631) or fax (202-225-6788). Email should be directed to his Legislative Director, Charlie DeWitt, at: . Rep. Campbell's web site is: http://www.house.gov/campbell (NOTE: this URL is no longer valid as of 05/23/2001).


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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