Breaking the Cable Cabal
I’m sure there are a few of us who remember when there was only one telephone company. In those days if you wanted to do networking over any significant distance, AT&T made it happen. While the monopoly may have had the advantage of simplicity, telecommunications competition and the Internet have resulted in innovation, enhanced services and lower prices -- something unheard of in the days of "one-choice-for-everyone" networking.
Some monopolies make sense. After all, who wants to change long-distance services only to find out that their house has to be rewired to accommodate the new service? The idea is to limit monopolies to a few specific areas and let a thousand flowers bloom everywhere else. After many years we have finally achieved balance in the telephone network: I can get my phone service from a menu of competitors, but I don’t have to have a telephone pole in my yard for each company.
But will this same lesson apply to cable? Sometime soon your customers and employees will use cable modems to access the Internet. Incredibly, there are entrenched interests that don’t want the benefits of competition to apply to the cable-based Internet access marketplace.
To get the advantages of high-speed cable Internet service, you simply request access to the Internet through your regular cable TV service provider. The cable company then chooses your Internet service provider (ISP) for you. Unlike the situation with traditional Internet service providers -- where you can shop for service and value from among 6,000 competitors -- cable subscribers have no choice. Have a problem with your cable-based ISP? Tough! In North America you get one of two ISP choices: Time Warner’s RoadRunner or Excite@Home.
Cable companies say that unless they can control their own marketplace and customer base they won’t have the financial resources to build high-speed access to residential and small-business users. The cable companies also claim there is no way to separate the access component from the Internet service component. The first claim is nothing short of blackmail and the second is pure bluff.
No monopoly was needed to build the Internet and none is needed to build a broadband infrastructure. If telecommunications companies put broadband services -- such as cable modems and xDSL -- in place, they should be rewarded with fees that provide a reasonable return on investment. But to suggest that the cable operators should be the only companies with the privilege of servicing cable customers is a return to the ills of our monopolistic past.
Even more remarkable is the suggestion that there is some technical barrier preventing ISPs from providing competitive high-speed access over cable. Mainstream cable companies have long claimed that it is impossible to separate the cable delivery service from Internet access. Those same companies were embarrassed recently when GTE.net used its cable subscriber base in Clearwater, Fla., to prove that competitive access was not only technically possible, but also affordable. The GTE.net solution would cost cable companies less than $1 per subscriber.
Several communities are investigating requiring "open access" to cable infrastructure. When the cable TV giant TeleCommunications Inc. was purchased by AT&T, many communities rubberstamped the transfer of the local cable license. Portland, Ore., paused during the process and imposed open access for ISPs as part of the conditions of license transfer. When challenged, a federal court upheld the city’s right to impose the rules. Broward County, Fla., and San Francisco’s Board of Supervisors are also considering open access rules for cable companies.
Other cities have considered open access rules, but they decided that the time wasn’t right. The problem is this: If one city requires open access to cable broadband and the next doesn’t, where does that leave the company outfitting its telecommuters and executives working from home? If we allow that to happen, we get nothing more than a crazy quilt of competing regulatory regimes. What’s needed is not the city-by-city and county-by-county decision making that is under way, but an informed, progressive national policy that ensures competition -- not monopolies -- guides the development of high-speed Internet access.
Today the largest of the cable-based ISPs is Excite@Home with slightly more than 600,000 customers. Intriguingly, Excite@Home is a company controlled by AT&T.
But wait a minute, I vaguely remember AT&T as the company with a monopoly on phone service only a few short years ago. Could it be a coincidence that the same company that fought for monopolies in telephone service now leads the charge for monopolies in the cable ISP market? --Mark McFadden is a consultant and is communications director for the Commercial Internet eXchange (Washington). Contact him at mcfadden@cix.org.