NNSquad - Network Neutrality Squad
[ NNSquad ] Re: Fight over municipal broadband rules in North Carolina
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Richard -- In this case, the authors of The Free Dictionary are
mistaken. (As I said, it's a common misunderstanding.) I've worked
with local cable franchises for close to twenty years, and I've seen few if any
that were exclusive, even among those dating from before
1992.
To be sure, it was a common assumption in those days that cable was a
"natural monopoly." The economics of the business, and what the trade
press has called a "gentleman's agreement" among the early multiple system
operators, generally discouraged competitive entry. But if one looks
at the actual documents, one finds that the franchise agreements and ordinances
were not written to forbid possible competition.
I'll refrain from taking up your point about municipal ownership of
communications systems -- that would seem to take us somewhat off-topic for
the listserv. A good source on this subject is the American Public Power
Association's site at
Other information can be found at sites such as
Rick Ellrod
From: Richard Bennett [mailto:richard@bennett.com] Sent: Wednesday, March 16, 2011 7:00 PM To: Ellrod, Rick E. Cc: nnsquad@nnsquad.org Subject: Re: [ NNSquad ] Re: Fight over municipal broadband rules in North Carolina "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 dowe 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 theypay 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 trafficlights 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 andopportunity.The cable companies would still oppose funding infrastructure but we'dhave 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 |