The Internet Distinction

(Original at Wired)

If the current internet access providers that dominate the American telecommunications landscape could get away with it, they’d sell nothing but specialized services and turn internet access into a dirt road.

[. . .]

[I]ncumbent internet access providers such as Comcast and Time Warner (for wired access) and AT&T and Verizon (for complementary wireless access) are in “harvesting” mode. They’re raising average revenue per user through special pricing for planned “specialized services” and usage-based billing, which allows the incumbents to constrain demand. The ecosystem these companies have built is never under stress, because consumers do their best to avoid heavy charges for using more data than they’re supposed to. Where users have no expectation of abundance, there’s no need to build fiber on the wired side of the business or build small cells fed by fiber on the wireless side.

If the current internet access providers that dominate the American telecommunications landscape could get away with it, they’d sell nothing but specialized services and turn internet access into a dirt road.

But the key barrier to competition – the incumbents’ not-so-secret weapon – is the high up-front costs of building fiber networks. That’s why the new 1-gigabit-per-second network planned by Google for residences in Kansas City was cited as an example of a “positive recent development” in the FCC chairman’s speech. Google was welcomed with open arms by Kansas City because the company offered a wildly better product than anything the cable distributors can provide: gigabit symmetric fiber access. The company has the commercial strength to finance this build itself, and it has driven down costs in every part of its product to make its Kansas City experiment commercially viable.

While the Google Fiber plan provides a valuable model, other communities that want to ensure their residents get fiber to the home shouldn’t have to wait.

We need policies that lower the barriers to entry for competitors. Otherwise, we’ll be stuck with the second-best cable networks now in place around the country, with their cramped upload capacity, bundled nature, deep affection for usage-based billing, and successful political resistance to any form of oversight.

[. . .]