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Only Co-Ops Can Fix West Virginia’s Dismal Broadband Desert

West Virginia still ranks 43rd in the nation for having the worst broadband availability, despite claims from providers like Frontier Communications that rural broadband expansion has been ongoing and have cost the company tens of millions of dollars.

The state’s two senators are working to get more attention on broadband issues in one of the country’s most rural and mountainous states, despite the fact the free market is not likely to solve West Virginia’s broadband woes.

“Broadband high-speed is tremendously needed,” said Senator Joe Manchin (D-W.V.). “We have over 18 to 20 percent of West Virginians not connected whatsoever.”

“I’m working everyday on this in a bipartisan way,” said Senator Shelley Moore Capito (R-W.V.). “It’s essential for our economy, our health care, our education. All of the things that are in a new economy.”

The federal government has distributed broadband grant funds to help address rural broadband unavailability, but after a decade of assistance, rural residents often remain without service. Charlie Dennie believes taking charge of broadband issues on the local level is the only way broadband problems will finally be resolved. Dennie is a big believer in public broadband co-ops, where local communities manage their own internet access affairs without waiting around for big phone and cable companies or the federal government. Dennie runs a business in the state that depends on broadband, and if he waited for incumbent providers like Frontier to deliver 21st century broadband service, his business is likely to go out of business.

That prompted him to write this commentary:

Dennie

Much of West Virginia is a broadband desert, and we have been foolishly pleading with the major carriers for water.

Recently, we seem to be coming to terms with reality. The reality is, they’re not coming, broadband is not a utility. The international, modern-day, robber barons dominating internet delivery have no obligation or incentive to meet our needs. Their aggressive return on investment models can’t be met in the small markets. Still, they attempt to roadblock appropriately scaled providers from entering the market and meeting our needs.

Since internet and cable TV are not utilities, the carriers are free to pick the low hanging fruit of our more densely populated communities and move on, leaving smaller markets stranded on the wrong side of the digital divide. The major carriers’ only obligations or concerns are with Wall Street. Main Street and all that term implies is not a consideration.

If we’re going to see our desert watered and blooming, we’ll be digging our own wells, meaning, building our own networks. The incumbent telephone companies and the cable TV providers bristle at this idea. The major providers spent over $66 million last year to lobby the states and Congress. Twenty-one states have now roadblocked or outlawed municipal or community-owned fiber. Municipal or community owned fiber is a serious threat to the status quo.

In years past, no one would have been surprised if West Virginia lawmakers had sat on their hands and done nothing or, enacted more protectionist legislation. That didn’t happen with this Legislature. Paraphrasing Bob Dylan, “The times they are a-changing.”

During the 2017 legislative session, I witnessed the boldest and most fearless leadership in my memory. The House of Delegates Judiciary Committee led by its chairman, Del. John Shott (R-Mercer), and Vice-Chairman, Del. Roger Hanshaw (R-Clay), introduced HB-3093. It was a sweeping piece of legislation sending a strong message to the incumbent internet providers to provide better service or make room for someone who will.

Carmichael

HB-3093 created the West Virginia Broadband Enhancement Council, streamlined the process for attaching fiber to utility poles, cleared the way for new construction methods, authorized the West Virginia Economic Development Authority to make loan guarantees for broadband construction and authorized the creation of cooperative associations for internet. As a proponent of the legislation, I requested a public hearing. Gathering in the House chamber only hours before the vote, industry lobbyists voiced strenuous objections. The strongest objections to the bill were the provisions streamlining attachments to utility poles and authorizing cooperative associations to provide broadband.

HB-3093 passed the house with 97 votes. I spoke to Senate President Mitch Carmichael (R-Jackson), just before the bill was introduced in the Senate. Sen. Carmichael had the power to keep the bill from advancing and Frontier, his employer at the time, was out in force to stop it. Before the bill went to the floor Sen. Carmichael said to me, “They’ll fire me, but I have to do what I think is right.” HB-3093 passed the Senate with Sen. Mike Romano (D-Harrison), casting the single, dissenting vote. A few days later, Frontier Communications fired Sen. Carmichael. Today, there are some who want to “Ditch Mitch,” but I will always remember the day he was called to choose between his economic self-interest and what was best for his constituency. Mitch fell on his sword. He did what he thought was right.

It’s important to know where you have been to understand where you are going, and this is only a chapter of our emerging broadband story. Changing the rules that protect the powerful to move us forward requires courageous leadership. If you believe broadband isn’t a political issue, I can give you 66 million reasons why you couldn’t be more wrong.

Ironically, community owned networks will be good for the current providers. The community owned networks provide the “last mile” to the home or business that enables delivery of high-speed internet. The community networks still need the content provided by current carriers. The communities will have choices and can negotiate with providers. Everybody wins.

I’ll have more for you later. Meanwhile, visit the broadband council at https://broadband.wv.gov. Take the speed test, then look under the “Resources Tab” about co-ops. Ignore the naysayers. I’ll show you how co-ops will change everything.

History Lesson: Qwest v. The City of Boulder – Helpful to Municipal Broadband Cause?

Phillip Dampier July 16, 2013 Astroturf, Community Networks, Competition, Editorial & Site News, History, Public Policy & Gov't Comments Off on History Lesson: Qwest v. The City of Boulder – Helpful to Municipal Broadband Cause?
Phillip "It worked for Qwest so why not community broadband" Dampier

Phillip “It worked for Qwest so why not community broadband” Dampier

While doing research on another story, I recently uncovered a fascinating legal case that set an important precedent on whether it is right for a community to hold a referendum before authorizing a new telecommunications provider to offer service in a community.

Opponents of community-owned broadband networks routinely claim such services are “undemocratic” because they can exist without the majority support of the community they propose to serve. In 2001, Qwest (now CenturyLink) ran into just such a “majority-rules” provision in Boulder, Colo. that companies like AT&T and Time Warner Cable advocate should be a law everywhere.

A provision in Boulder’s Charter required that voters in a municipal election approve any cable franchise before it was granted by the city. Wishing to avoid the cost of such an election, Qwest sued the City of Boulder and asked for summary judgment to declare the policy unlawful. Chief Judge Lewis Babcock found Qwest’s argument compelling enough to invalidate the city’s mandatory referendum provision.

Qwest argues that the language in [U.S. Federal Law] 47 U.S.C. § 541 regulating franchising authorities is in direct conflict with [Boulder’s] § 108’s mandatory election provision. I agree.

First, the Act provides guidance to, and restrictions on, “franchising authorities.” Section 541’s requirements are directed toward franchising authorities. See 47 U.S.C. § 541(a)(1), (3), (4). Under the statute, a “franchise” is “an initial authorization, or renewal thereof,” issued by a franchising authority to construct or operate a cable system. 47 U.S.C. § 522(9). A “`franchising authority’ means any governmental entity empowered by Federal, State, or local law to grant a franchise.” 47 U.S.C. § 522(10) (emphasis added).

Here, Qwest approached City officials to seek franchise approval. The City granted a revocable permit to Qwest, and agreed to “grant a cable television franchise authorizing [Qwest] to provide cable television service within the City for a term of years” once an affirmative vote by the qualified taxpaying voters occurred. There is no evidence that the City negotiated the franchise in any manner, or put any additional restrictions or caveats on the franchise beyond voter approval. City officials follow the will of the voters with no additional scrutiny or decision-making. Thus, the City has abdicated franchising authority to the City’s voting citizens. These voters cannot, by the plain terms of the statute, be a “governmental entity empowered by Federal, State, or local law to grant a franchise.” 47 U.S.C. § 522(10). Therefore, direct conflict between the federal and local laws exist, as it is impossible for the franchise to be granted by a governmental entity as required by the Act, and simultaneously granted by the voters as required in § 108.

Second, § 541 imposes numerous and specific requirements on franchising authorities. The statute forbids exclusive franchises, see § 541(a)(1); unreasonable refusals to award additional competitive franchises, see id. at (a)(1); requirements that have the purpose or effect of prohibiting, limiting, restricting, or conditioning the provision of a telecommunications service by a cable operator, see id. at (b)(3)(B); ordering a cable operator or affiliate thereof to discontinue the provision of a telecommunications service, discontinuing the operation of a cable system by reason of the failure of a cable operator to obtain a franchise or franchise renewal, see id. at (b)(3)(C)(i)-(ii); or requiring a cable operator to provide any telecommunications service or facilities as a condition of the initial grant of a franchise. See Id. at (b)(3)(D).

A franchising authority has affirmative requirements as well. It must assure that access to cable service is not denied to any group of potential residential cable subscribers because of the income of the residents of the local area in which such group resides, see id. at (a)(3); and allow the applicant’s cable system a reasonable period of time to become capable of providing cable service to all households in the franchise area, see id. at (a)(4)(A).

However, by allowing voters unfettered and unreviewed discretion to grant or reject a franchise, § 108 is in conflict with virtually every provision in § 541. Because only WOWC has received a franchise, voters could effectively grant WOWC an exclusive franchise simply by refusing to vote affirmatively for a second operator. See id. at (a)(1). Voters could unreasonably refuse to award an additional competitive franchise, as they could deny a franchise for any reason or for no reason. See id. Qwest correctly argues that § 108 “provides voters with the unfettered and unreviewable discretion either to grant or deny a cable television franchise for any reason, or for no reason at all.”

Qwest (now CenturyLink), is Idaho's largest Internet Service Provider.In brief, the judge found cable franchises are granted or denied at the municipal level by local government, not through referendums. The City of Boulder was effectively abdicating its responsibility under federal law to manage the franchising process itself. There is no provision in federal law that allows citizens to directly vote a cable franchise agreement up or down, although voters can use the ballot box to remove local officials who do not represent the will of the majority.

More importantly, the judge recognized that turning the process over to local citizenry could unintentionally hand an incumbent provider a monopoly just by voting down any would-be competitor. Why would local citizens oppose competition? As we’ve seen in the fight for community broadband, incumbent providers will spend millions to keep would-be competitors out with a variety of scare tactics and propaganda. Providers have suggested community networks are guaranteed financial failures, will result in yards being torn up to install service, might result in local job losses, and will raise taxes whether residents want the service or not.

Judge Babcock also found that laws that could limit effective competition to incumbent cable companies are in direct conflict with the 1992 federal Cable Act:

The legislative history clearly supports the proposition that Congress was focused on fostering competition when passing the 1992 Act. The Senate Report regarding the Act states, “[I]t is clear that there are benefits from competition between two cable systems. Thus, the Committee believes that local franchising authorities should be encouraged to award second franchises.”

[…] Given the clear intent of Congress to employ § 541 as a vehicle for promoting vigorous competition, I conclude that § 108 is in conflict. Section 108 serves only to provide a significant hindrance to the competition that Congress clearly intended to foster. It forces the potential franchiser to spend money, time, advertising, and logistical support on an election. Thus, § 108 “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”

Perhaps the time has come to raise similar challenges in states where legislatures have passed community broadband bans or placed various impediments on providing service. If Qwest can successfully argue that such rules are designed to limit competition, local communities can certainly argue the panoply of anti-competition laws that were written by and for incumbent cable and phone companies deserve the same scrutiny.

Referendums are an inappropriate way to approve the entry of new competitors.

Georgia’s Rural Towns Up in Arms Over Anti-Community Broadband Bill Pushed by Windstream

Windstream is reportedly behind the latest effort to ban community broadband networks in Georgia.

Rural communities across Georgia are upset about a new piece of legislation ghost-written by Windstream Communications that would keep broadband a strictly private affair in the Peach State.

House Bill 282, introduced by Rep. Mark Hamilton (R-Cumming) would prohibit publicly owned broadband networks from being built anywhere an incumbent provider delivers at least 1.5Mbps “broadband” in the state.

Sources familiar with the legislation say Windstream, a phone company primarily serving smaller communities, is the primary force behind the bill now before a legislative committee. When news of the bill came to light earlier this week, consumers and local communities began to push back with state legislators. A planned hearing on the bill has been temporarily pushed back until next week.

The legislation would effectively tie the hands of municipalities that have waited more than a decade for AT&T, Windstream, CenturyLink and other phone companies to bring DSL broadband to rural Georgia.

While not proposing a total ban on public broadband, the bill’s requirement that service be denied to a customer in a “census block” where at least one home can receive slow speed DSL makes building such networks nearly impossible.

gamuniThe Georgia Municipal Association notes local governments in small towns and cities, already strapped for resources, would have to prove to the Georgia Public Service Commission that each census block a community wants to serve has no existing broadband service (census blocks are the smallest geographic area the Census Bureau uses for data collection.)

There are 291,086 census blocks in Georgia, making such a review difficult at best.

For communities that have already built public broadband networks, the bill brings more bad news. Under its terms, existing networks would not be allowed to expand anywhere any other provider delivers even a modicum of “high speed” 1.5Mbps Internet access. With many community networks built out in stages to minimize initial financial outlays, H.B. 282 could ruin the economic cost recovery models under which existing networks were financed and built, potentially risking bondholders.

Rep. Hamilton does not seem to care about them or whether rural Georgia gets Internet access or not. He answers to a higher calling: Windstream’s lobbyists.

gacompThe final report of Gov. Nathan Deal’s Competitive Initiative found rural Georgia at a disadvantage simply because many communities cannot get broadband service. Several regions in Georgia called on Deal’s office to help improve inadequate broadband infrastructure.

Instead, Hamilton’s bill would turn over Georgia’s broadband needs to phone company “Return on Investment” formulas that guarantee large sections of rural Georgia will remain unserved, with other areas left underserved. The bill itself defines suitable broadband at just 1.5Mbps, deemed inadequate by the Federal Communications Commission for today’s broadband user.

The bill’s defenders told The Telegraph the bill was designed to “close off an opportunity for government waste.” The bill also closes off an opportunity for better broadband and competition in Georgia.

“The fundamental question is rather simple: does Georgia want local leaders to determine the economic and investment strategies for their communities or do we want those decisions to be made solely on the business plans of companies based outside of the state,” asked the Georgia Municipal Association.

Georgia residents can contact the House Energy, Utilities & Telecommunications Subcommittee members and tell them to reject H.B. 282. Local municipalities seeking further information about this legislation should contact the Institute for Local Self-Reliance for additional information and guidance.

Stupid Opposition to Community-Owned Fiber Broadband: It Will Raise Your Electric Bill, Blind Your Kids

Halloween scare stories are back!

It is amazing the length some incumbent broadband providers will go to stop publicly-owned networks from getting off the ground and competing with the “good enough for you” service on offer from the local phone or cable company.

This morning, Stop the Cap! received word from a Minnesota reader who reports their dinner hour was interrupted by an unsolicited phone call from a group called “Americans for Sensible Broadband,” which as far as we can tell does not exist as a formal group. The caller used ridiculous scare tactics worthy of a bad Halloween movie:

  • Did you know that fiber broadband networks are expensive to run and will increase your electric bill to pay for the high powered lasers needed to send the signal to your home?

Fiber broadband projects now expanding in Minnesota have no relation to your electric bill because most are run by independent community-owned co-ops, not electric utilities. Even if they were run by an electric provider, the cost to power a fiber network is far smaller than the network of signal amplifiers and other transmission equipment needed by traditional cable and phone companies. The only electrical expense to the homeowner is powering any set top boxes or other related equipment to make use of the service. These costs are comparable to what one would pay with cable or phone services.

  • Most fiber networks are not actually fiber at all. The largest companies in America actually let you keep your current wiring, but that is not fiber, so why spend tax money on a risky fiber network?

While AT&T U-verse has chosen the route of “fiber to the neighborhood,” which still relies on existing copper wiring from nearby poles to your home, many fiber to the home projects take fiber… straight to the home. Some community networks do make use of very short lengths of pre-existing copper wiring inside your home, but this has more to do with your convenience. You don’t need a fiber connection to your landline phone, for instance. Compare the broadband speeds and services on offer from the community provider vs. incumbent cable and phone companies. Choose the one that delivers the best services for the price.

  • America’s cable and phone companies are working hard for pro-growth, pro-expansion policies in Washington that will allow your community to get the benefit of billions of private investment, at no risk to you.

An in-home threat to your children or incumbent provider profits?

Incumbent phone and cable companies already enjoy a higher level of deregulation than ever before. If they have not spent money to improve broadband in your area before, there is nothing that will open their wallets to provide the service now, unless someone else subsidizes part of the cost. Guess who “someone” is? That’s right. You the taxpayer or ratepayer. Whether in the form of broadband subsidies paid for by taxpayer dollars or ratepayer subsidies from the Universal Service Fund, only subsidies or competition prod incumbents to deliver better broadband to rural Minnesota (or anywhere else). If you fail a “Return On Investment” test, you will not get broadband no matter how much deregulation gets approved in Washington.

The question for rural consumers is whether AT&T, Frontier, CenturyLink, Comcast, or Charter Cable has your best interests at heart or whether a community co-op you partly own will.

  • In socialistic countries, the government runs the broadband service and can monitor your web browsing. Do you want your local community checking up on your online activities?

“Socialistic” is in the eye of the beholder. Most broadband networks are run by private telecommunications companies, some with state subsidies, others entirely on their own. The federal government’s security agencies already have access to monitor Internet traffic under warrantless wiretapping laws, and that extends to every provider in the country, private or public. That said, there is no evidence local government officials would monitor your web browsing habits, much less have the budget or technical expertise to do so.

  • Fiber cables create more hazards on utility poles designed for phone, cable and electric service. Is it worth risking those services for an unnecessary and expensive fiber network?

Electric and phone companies used the same scare stories to try and keep cable television lines off utility poles more than 30 years ago. Cable operators fought for and won the right to use utility poles to no ill effect, and at fair prices. It is ironic some cable companies want to use the same argument against municipal fiber that phone and electric companies used against them.

  • In these difficult economic times, do you realize your local taxes could triple to pay for unnecessary fiber Internet?

Most public broadband projects are financed by municipal bonds obtained in the private free market. Investors can decide for themselves if they represent a safe investment, and many do. If the networks fail, private investors typically take the hit.

But the most ridiculous claim of all was that “recent news reports warn that lasers could blind your children if they happen to play with the fiber cables in your home.”

The only “news report” we could find on this subject was an Engadget news story from 2011 about an S3 Krypton laser that could blind astronauts without proper safety equipment. But those lasers are not powering broadband networks.

In reality, fiber to the home networks are safer than traditional copper phone wiring, which can send a significant electric shock to anyone playing with the wiring when a telephone rings. Many fiber networks rely on Class 1, low power lasers — the lowest risk level. Even if a customer stared at the lit end of an optical fiber connector, the visible light would be diffused into a cone pattern that would be completely harmless by the time it reached the retina. Many networks also include a secondary safety mechanism that quickly shuts down the laser light once the connection has been broken. Certain higher-powered laser communications networks can have some safety risks, but almost entirely for workers working on primary cables that deliver service to dozens of homes. Those workers are well-trained to avoid those risks.

Minnesota seems to be one of the latest hotbeds of incumbent wrath over expanding community-owned broadband networks. Despite efforts to label them insidious creeping socialism, they are actually no more threatening than a traditional co-op, except perhaps to incumbent cable and phone companies that have been running to the bank cashing checks from customers enduring low broadband speeds at high prices.

Shear Madness: Friends of Big Telecom Still Shortsighted on Why Broadband Competition is Important

Phillip “Artificial Scarcity for Fun and Profits” Dampier

It would be an understatement to say I’ve heard the argument once or twice that there is simply no economic room for additional players to enter what Big Telecom companies always claim is a robustly competitive marketplace for Internet access.

Virtually every company facing inquiries from regulators, politicians, and consumers always makes the point today’s deregulated broadband playing field is an excellent example of free market competition at its best.

While they advocate for even more deregulation, oppose the entry of community-owned broadband services, and demand more spectrum from Washington lawmakers, we endure a veritable monopoly/duopoly for Internet access. Their defense, after a dismissive rolling of the eyes, is that we just don’t understand business.

Enter Tim Lee, writing for the alternate reality reader of Forbes, who decided to prove his argument by comparing broadband with Supercuts:

Being the first to build a hair-cutting shack in a particular customer’s backyard can be pretty lucrative. It gives you a de facto monopoly on that household’s haircut business. Let’s assume that it takes 4 years worth of haircuts to recoup the costs of building a shack for a particular household. While barbers will need to raise some extra capital to build the shacks, in the long run the owner of the first shack may be able to earn big monopoly rents.

Now along comes a new barber who wants to enter the hair-cutting business, but every household already has at least one hair-cutting shack. So he needs to build hair-cutting shacks in backyards where another barber has already built one. And that’s an economically precarious situation. Remember, we assumed a monopolist needs to do 4 years worth of haircuts in order to break even. But if you build a shack in a backyard that already has another barber in it, you shouldn’t expect to get more than half of the customer’s business, on average, over the long run. Not only that, but competition will push down prices, so you’ll have to do more haircuts to recover the costs of construction. So you’ll be lucky to recover your initial investment within 8 years, and it could easily take more than a decade.

And things are even worse for the third or fourth barber who builds in a particular backyard. The fourth barber will be building in a yard that already has three barbers. He can only expect to attract 25 percent of the household’s business, and strong competition among barbers means his margins will be pretty thin. It’s hard to see how he could ever recover the costs of his investment.

Brushing away the hair-cutting analogy, Lee’s point is that it is wasteful and inefficient for competitors to overbuild new networks where others already exist. The phone and cable companies that dominate the marketplace today decry additional competition as a death blow to their business models, because with so many providers fighting for customers (by lowering prices and offering better service), not every provider can sustain a profit Wall Street investors expect quarter after quarter. This argument is particularly common when attacking those dastardly socialist community-owned broadband providers they say destroy private enterprise (while unconvincingly also warning they will always fail and cost taxpayers millions on the way down). It is also why Wall Street continues to beat the drum for additional consolidation in the wireless marketplace, where anything more than AT&T and Verizon Wireless represents too much revenue destruction.

Lee does make some valid points:

  1. Infrastructure costs are the biggest expense in launching a new network, especially wiring the last mile to customers;
  2. Verizon FiOS overestimated its potential market share and found it harder to turn a profit than first anticipated;
  3. Other utilities have avoided building redundant networks (ie. you don’t have two companies providing their own electric, water, and gas lines).

When communities decide to offer their own broadband service, incumbent cable and phone companies spend big bucks to scare residents.

But Lee’s conclusion is entirely favorable to the industry he often defends — that is just the way things are and customers should not expect anything better.

Those arguments are usually also the basis for free market declarations that if a private company cannot find a way to deliver a service at a profit, then those left out will just have to do without.

Thankfully, despite Lee’s criticism of Google Fiber in Kansas City as “extremely wasteful,” the search engine company is perhaps best positioned of all to turn the industry’s common refrain against new competition on its head.

Every so often, a surprising third party shows up with the resources to ignore Wall Street’s conventional wisdom. Enter the deep pockets of Google Fiber or a bond-backed community provider threatening to deliver service far better than what a community currently enjoys. The predictable defense from incumbent providers:

  • Nobody needs faster broadband speeds;
  • Community networks are a government takeover of the Internet;
  • Fiber optics are expensive and represent an unnecessary investment;
  • Public broadband destroys private investment and jobs at incumbent commercial providers;
  • This is just a political stunt, not a real effort at taking Internet speeds to the next level.

Without the kind of competition on offer from Google, community providers, and private providers like Verizon taking a chance on FiOS fiber optics, there would be no room for innovation in the marketplace.

Provider tolerance for today’s marketplace duopoly and the lackluster service that results is reminiscent of a joke told by President George W. Bush’s in 2000: “If this were a dictatorship, it would be a heck of a lot easier…just so long as I’m the dictator.”

It is easy for today’s comfortable duopoly providers to take shots at would-be competitors while dragging their feet on network upgrades. They have little to fear with Wall Street on their side, joining opposition to new competition as harmful to profits. Even Verizon Communications, one of the two dominant providers, quickly heard from analysts irritated with the infrastructure expenses involved upgrading to a fiber optic network. At the heart of that criticism was a sense it was an unnecessary expense, with no reason to change the safe and reliable status quo. Innovation that costs money is the enemy of Wall Street, unless competition warrants the investment.

Therein lies the key. Effective, disruptive competition demands companies do something different. Lee may be right that three companies cannot easily bring home the big profits. Wall Street may have to make do with less. In a competitive market, the player offering the least will be the first to innovate to keep or attract customers, or eventually close their doors. Those remaining will compete in turn to deliver the best possible service at the lowest possible price. That itself is a departure from the comfort zone enjoyed by phone and cable operators today where neither feels much pressure. Cable companies won’t ever compete with other cable companies and the same is true for phone companies. But if a company like Google arrives, the decade-long coffee break is over.

Want proof? Just look at cable operators struggling to keep video customers who are now finding alternatives with Netflix and online viewing. They are increasingly looking for ways to enhance the value of cable television by offering online viewing themselves. Even rate increases have slowed. If Netflix and cord-cutting were not factors, would cable companies have changed the way they do business?

Google’s marketplace disruption delivers for consumers.

Lee is right saying it is not easy to break into the broadband business. Only some might realize the same investors and Wall Street barons that dislike profit-eroding competition also often happen to be in the business of loaning money to finance new businesses. More than a few will turn those loans down as too risky to contemplate.

But here comes the rhetorical trap Lee’s argument gets ensnared in: If running redundant networks is wasteful and we still need competition, the logical solution would be to construct or nationalize one advanced network on which all providers would market their services. Why waste time and money on duplicate copper and coaxial networks when a single fiber to the home network could deliver improved service well beyond what the local phone and cable company can offer.

Isn’t the answer to run a single telecommunications line into customer homes (one preferably not controlled by any provider), and let competition bloom on that advanced infrastructure? That is the solution Australia has chosen, scrapping the country’s ancient copper wire phone lines in favor of one national fiber network. Most community providers also operate open networks that other cable and phone companies can utilize (but often petulantly refuse).

Somehow, despite the enormous savings possible from sharing or offloading network infrastructure expenses, I doubt providers will consider that the kind of innovation they want or need.

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