Neutrality’s Reality: Eureka!

By Steve Spain

This is the third installment in our series on the proposed Net Neutrality regulations. If you haven’t followed “Neutrality’s Reality” from the beginning, the introduction can be found here.

Thy Leader, and thy Leader alone, in his Infinite Wisdom, shall reveal to the people the Only Truth.” [I Barack 1:14]

“The court upheld the Commission’s finding that Internet openness drives a ‘virtuous cycle’ in which innovations at the edges of the network enhance consumer demand, leading to expanded investments in broadband infrastructure that, in turn, spark new innovations at the edge.”

• Even when naming a bench at a lower level than the Supreme Court, even if the Commission were to speak of Pima County Superior Court, “the Court” mandates a proper noun. This continues the disregard for the Judiciary when it operates counter to the whim of the sitting Executive.

• The “virtuous cycle” of innovation that has propelled computing and the internet through more change more quickly than any technology in the history of civilization has succeeded in the current environment, free from the shackles of government regulation. The most significant leaps and bounds in the development of the Internet have all occurred in the past twenty-five years, well within the past thirty-one years of deregulation. No rational person would conclude, with knowledge of the real-world ramifications of regulations, that the Open Internet mandates regulation for it to come about, or continue to be, or whatever the White House wants to portray.

• Start counting, if you will, how often the Commission mentions the benefits of regulation before they even hint at the costs of regulation. They didn’t mention it here, and that would be the beginning of a pattern.

• How many internet service providers do you have available to you where you live, right now? In all likelihood, you thought of your phone company and your cable company, and none other. Are you aware of the fixed wireless providers on the market? At least two in Tucson have been in operation for over ten years. In case you are unfamiliar with fixed wireless, this is not the same as mobile internet via your cellular carrier; fixed wireless providers put an antenna at the roofline and deliver speeds that compete easily with cable and DSL.

Why, you might ask, do these fixed wireless carriers not have a higher profile? Because the number of wireless frequencies, the allocated “spectrum” for this kind of network, is restrictive. If you immediately speculated that the Federal Communications Commission controls the available spectrum, could open up more spectrum for fixed wireless, and has adamantly refused to do so, you deserve a gold star and a half for following along attentively!

Clearly, the FCC hasn’t allowed the fixed wireless carriers to serve enough customers to be truly competitive in the marketplace. In the proposed regulations, the Commission has offered no indication that it will open additional spectrum. In fact, the FCC claims there is insufficient demand for spectrum for fixed wireless! If you could choose a carrier other than CenturyLink, Comcast, or Cox, how quickly would your clamber over your current carrier to plug into that connection?

Further, the FCC has offered absolutely no indication that the new regulations would enable or require the incumbent cable or phone companies to provide connectivity from the residence or business to competitive providers. The Commission tried this twenty years ago, but ineffectively.

Utility companies, phone and cable companies included, received from local municipalities “natural monopolies”. In decades past, the utility providers received exclusivity in their markets in exchange for guarantees that they would serve all customers in a defined area. This meant building infrastructure once, which would save the customers the passed-on cost of the capital build-out. Often, the municipalities shared some of the capital costs.

However, in the many, many intervening years, the municipalities and the carriers have recouped their initial investments multiple times over through tax revenues. The logic of these monopolies has started to falter.

The FCC, in deregulating the phone network, opened the door for a new kind of carrier. The baby bells became Incumbent Local Exchange Carriers, or ILECs, pronounced eye-lecks; Competitive Local Exchange Carriers, or CLECs, pronounced see-lecks, gained access to the “last mile”, the connection from the phone company’s central offices to businesses and residences.

But the ILECs held an important trick up their sleeves: They could limit the services they would support for CLECs, ensuring that the new competitors could not compete on internet speed in most markets. (In some markets, CLECs provided broadband internet before the ILECs did, but the ILECs caught up in the late 90’s.)

If the FCC wanted to ensure openness and innovation in internet services, they could completely open the last mile, making the connection from a customer to the nearest wiring terminus perfectly competitive. Considering that local municipalities, and now some homebuilders, have contributed to the initial cost to lay those wires into the ground, and that both the incumbents and the municipalities have recouped their costs, this is a regulation that would ensure true neutrality.

Before you think this is an argument for more regulation, however, recall that the nature of the phone networks that allowed for this concepts of CLECs is a vestige of the decades of tight regulation over the national phone networks. Had government not interfered, the market may have created last mile companies and carriers that would have worked together symbiotically to allow one company in an area to build out connectivity and any of another companies to provide services competitively.

And yet, with no such separation of connectivity and services in the marketplace, the Commission has made zero mention of any requirement to make other carriers as competitive as can be on the current network.

A truly open, truly neutral network is one that allows me to source my connectivity from the provider of my choice, not the one my municipality allowed to put copper wire in the ground decades before the internet existed. The Commission has made no indication of making my access and yours truly neutral. But they happily give us so many reasons to trust them! The next reason comes tomorrow.

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