[ NNSquad ] Re: Fight over municipal broadband rules in North Carolina

[Richard Bennett <richard@bennett.com>]

Right about the 1992 act, wrong about the history. See:

"When Congress deregulated the cable industry with the 1984 Cable Act, its primary intent was to promote competition. The 1984 act sought to balance the government's dual goals of providing cable access to all areas and deregulating rates. The industry had argued that competitive market forces would produce competition and stabilize rates. However, competition did not occur in the ensuing years, and cable operators continued to enjoy a Monopoly in virtually all service areas. Before 1992, exclusive cable franchises were granted to the bidders who promised the widest access and most balanced programming. The government felt that this was the best way to ensure that cable's new and expensive technology was available to people in poor and rural areas as well as more affluent areas. As a result, bidders who promised more than they delivered were protected from competition. The 1992 Cable Act eliminated many of the barriers to competition that existed before. Most important, it abolished the exclusive franchise agreement, which had been a powerful monopolistic tool."

http://legal-dictionary.thefreedictionary.com/Cable+franchise

The current problem is cities and towns who want to function both as a regulator of capitalistic services and as a competitor.

RB


On 3/16/2011 2:24 PM, Ellrod, Rick E. wrote:

Mr. Bennett's comment includes a common misunderstanding on one point.
Exclusive franchises or "licenses" from local governments were always
very rare and have been unlawful since 1992. 47 U.S.C. sec. 541(a)(1).

Rick Ellrod



-----Original Message-----
From: Richard Bennett [mailto:richard@bennett.com] 
Sent: Tuesday, March 15, 2011 7:11 PM
To: nnsquad@nnsquad.org
Subject: [ NNSquad ] Re: Fight over municipal broadband rules in North
Carolina

Interesting comment, Bob. The rural broadband issue actually has more to
do with cable TV-type services than with Internet services, actually. 
Muni broadband networks have copied the triple play revenue model from
cable, and always have substantially more cable TV customers than
Internet customers.

There's a huge element of bad faith bargaining on the part of the towns
that operate their own triple play networks in competition with the
cable company. Towns previously granted the cable company an exclusive
license to offer cable TV, which encouraged the cable companies to
invest in a community network on the expectation that their investments
would ultimately pay back the investment and earn a profit.

It seems to me that communities should be able to operate their own
networks, but before they go into the cable business they need to
compensate the cable company for their investment, preferably by buying
them out. They're obviously not going to do that, of course.

The larger issue is that demand for broadband Internet simply isn't very
high in rural communities, so when you carve up the demand among two
wireline providers and the two satellite TV providers, it's hard for the
wireline networks to break even. The ultimate solution to this problem
is government-funded demand creation programs that enable people to get
cheap PCs and education in the benefits of the Internet.

There's already a lot more broadband Internet deployed in the US than
there is demand for it; something like 95% of Americans can get
broadband if they want it, but only 65% actually sign up. You don't
solve that problem by building more networks.

RB

On 3/15/2011 1:39 PM, Bob Frankston wrote:

While the cable companies have a visited interest in limiting 
competition we need to be more concerned about framing the debate on 
the presumption that the only funding model is "cable".

There's the implicit assumption that simply having a city create its 
own broadband network is automatically a good thing. But as I keep 
pointing out the business model of expecting people buy services in 
order to fund infrastructure is problematic, even more so when it is 
competing with commercial providers with deep funding. As we've seen 
in Burlington VT, if a city borrows from bondholders it is in hock to 
them but doesn't have the scale and deep pockets a company like 
Comcast has to cover the debt even if the particular cable system is 
not profitable.

Think of the 911 example -- why does the emergency respond system 
depend on people making enough phone calls to fund it. If the model 
makes sense we'd use it to fund fire and police services. But it 
doesn't make sense and we fund the fire and police services. So why do

we fund the emergency signaling system by taxing phone calls. Even 
worse, we then use this funding model abused 

<http://www.alternet.org/news/150132/how_politicians_are_using_911_emerg
ency_services_to_scam_millions_of_consumers/?page=1> 

and used as a way to make some VoIP services illegal by demanding they

pay for 911 service in an arbitrary location.

What cities need to do is change the framing and build a common 
infrastructure as an asset for the city that they pay for once and 
own. They can then use it all purposes ranging from police and traffic

lights to exchanging bits for consumer applications like video and 
medical monitoring and home fire detection.

We need to assure the legislation doesn't prevent a city from 
investing in new fiber or Wi-Fi or using existing copper as 
infrastructure completely distinct from services be they "cable" or 
simply exchanging bits (sometimes called "Internet").

Too bad some of the loudest voices are the most conservative -- 
advocating that cities emulate the old line cable companies rather 
than embracing the future by creating new infrastructure and

opportunity.

The cable companies would still oppose funding infrastructure but we'd

have to explain the wires are like sidewalks and not like television. 
I'd welcome a real debate.

-----Original Message-----
From: nnsquad-bounces+nnsquad=bobf.frankston.com@nnsquad.org 
[mailto:nnsquad-bounces+nnsquad=bobf.frankston.com@nnsquad.org] On 
Behalf Of Lauren Weinstein
Sent: Tuesday, March 15, 2011 14:48
To: nnsquad@nnsquad.org
Subject: [ NNSquad ] Fight over municipal broadband rules in North 
Carolina

Fight over municipal broadband rules in North Carolina

http://j.mp/fGNZe9  (Innovation Policy Blog)

--Lauren--

NNSquad Moderator

-- 
Richard Bennett