"Keep Copper Network and TDM," Some Argue
Creating good public policy in the communications realm is never easy, as regulators constantly are balancing. But it does seem as though “balancing” has become more precarious recently. Consider the whole matter of what to do about the legacy copper network, the “transition to Internet Protocol networks” and support for legacy services.
To be sure, the Federal Communications Commission has multiple goals. For example, the FCC says its mission includes “promoting competition, innovation and investment in broadband services and facilities, and “supporting the nation's economy by ensuring an appropriate competitive framework for the unfolding of the communications revolution.”
To some extent, of course, the goals of promoting competition and promoting investment are contradictory. As both U.S. and European regulators have discovered, promoting competition by expanding wholesale access to incumbent facilities often succeeds quite well.
But that same success also discourages further investment in facilities, since the owner of the scarce access network automatically enables robust competition when it invests in next generation facilities.
Likewise, the transition to the next generation of broadband networks would seem to require creating and maintaining incentives for facilities investment, balanced with the goal of promoting competition.
Sometimes that translates into rules that specifically require maintaining legacy facilities and services, even if that conflicts with the goal of supporting next generation network investment.
Ironically, we now see support both for expanded optical fiber access to support gigabit networks, and talk of preserving the life of copper networks to preserve competition.
The problem, of course, is that the copper network and legacy services are serving fewer and fewer customers, meaning the costs of serving each remaining customer are growing. at the same time the legacy services are being replaced by next generation services.
It isn’t easy, all might agree. But neither are matters helped when waffling occurs, as tough as firm policies might be. Granted, there are constituencies for keeping the copper network, and legacy services, alive.
But few seem to think it would be better if Internet service providers slowed their migration to fiber access networks, slowed the rate of speed increases or put obstacles in the way of faster Ethernet and IP services.
It is a balancing act, to be sure. But some methods of protecting competition actually are harmful to the goals of expedited investment in next generation infrastructure.
Making matters worse are asymmetrical regulatory frameworks that do not treat all providers of access and other services the same way.
The biggest U.S. high speed service providers (and Internet access is the strategic service) are AT&T, Verizon, Comcast and Time Warner Cable. But they play under different rules.
In fact, in terms of subscriber share, Comcast is the biggest, followed by AT&T, then Time Warner Cable, then Verizon, according to Leichtman Research Group.
High Speed Internet Access Subscribers
Subscribers 2Q 2014
Net Adds 2Q 2014
Other Major Private Cable Companies
Total Top Cable
Total Top Telephone Companies
source: Leichtman Research Group
True, Comcast and Time Warner Cable are not yet in the mobile business. But that will come, meaning all the largest telcos and cable companies will compete across the full range of anchor products and customer segments.
And one might also argue that asymmetrical financial returns--that underpin investment--now flow to app providers and device providers in the ecosystem, not to access providers.
Granted, it is not the business of the FCC to oversee the financial health of the device and app industries that all agree contribute to the nation’s economy. On the other hand, if there were obvious shifts in business model that directly affected the health of all contestants in the access business, one would think that would inform decision making.
In Europe, communications regulators have discovered that decades of successful promotion of competition have also lead to decades of lessened investment, and that the “pro-competition” policies are directly related to those outcomes.
It’s a balance; a tough balance. But both investment and competition must be supported.