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California ISPs Annoyed

FCC Ruling on DSL Re-Monopolizes Phone Networks Says California ISPs
SACRAMENTO, CA (PRWEB) August 8, 2005 -- The California ISP Association (CISPA), the largest state association of Internet service providers, reacted today to the U.S. Federal Communications Commission's ruling today that high-speed DSL Internet lines should be classified as an "information service" instead of a telecommunications service. The ruling would allow large phone companies to close their DSL networks and exclude independent ISP's from the DSL market. The result is that most ISPs would be eliminated from the broadband market.

"The FCC's version of what it calls "deregulation" is simply just a re-monopolization of a network that has been publicly regulated and paid for by rate payers for more than 100 years. This is not leveling the DSL playing field. The FCC is putting a fence around the playing field and giving the keys to a few phone companies with armies of paid lobbyists, letting the phone companies decide who can play in the broadband game.

Consumers and businesses need and deserve the choice they enjoy today. But the FCC's ruling will take away their right to choose broadband providers and services," says Dane Jasper, President, California ISP Association.

"Today's FCC decision will effectively eliminate the benefits of competition for millions of Americans. The FCC essentially turns control of Internet access over to a handful of phone companies and cable companies. Existing law requires the FCC to regulate communications services in the public interest, which means protecting consumers, encouraging economic development, and ensuring that competition is allowed to develop. Instead, the FCC has shirked its responsibility, allowing phone companies to put out of business the very companies who drive innovation in the Internet," says Mehrdad Saberi, Chairman, California ISP Association

"In 2002, President Bush signed Executive Order 13272, requiring federal agencies to implement policies protecting small businesses when writing new rules and regulations. President Bush's own Small Business Agenda states that every new business starts with an idea for a better product or process, which has been the driving force of Internet innovation. Not a single innovation related to the Internet has come from the former Bell phone companies. In fact, when DSL was being launched by other smaller companies, the Bells continued to insist that DSL would threaten the quality of voice calls."

"Innovation becomes reality only when confident entrepreneurs are willing to take economic risks and ISPs have taken this risk -- to the betterment of the entire economy. Phone and cable companies were not even pioneers in the Internet but they now seek to control access to it. Small businesses are the heart of the American economy because they drive innovation. In fact, new firms are established on the very premise that they can do a better job and recognize that a one-size-fits all approach is not good for business and innovation."

"A few legacy carriers cannot continue to benefit from valuable government grants and licenses, including the use of public rights-of-way, and be allowed to extend those rights in a way that bars ISPs from offering their service to the public."

"The FCC is entrusted with protecting consumers, encouraging economic development, and ensuring that competition is allowed to develop, rather than being quashed by a de-regulated monopoly. Already, we are seeing the Bells move to increase prices, and without regulation, small business will be harmed, thousands of ISPs will be forced out business, highly-skilled workers will lose their jobs and consumers will lose the choice of platform for broadband services and support."

"Deregulation will be bad for America and CISPA strongly discourage any attempt to turn over control of this nations broadband development to the phone and cable companies. The FCC will sacrifice many small businesses, consumer choice, and any hope of catching up with our foreign counterparts!" says Mark Esser, VP Board of Directors, California ISP Association

About CISPA
The California ISP Association, Inc. (www.cispa.org) has more than 100 independent ISP members representing more than 3 million California consumers and businesses. Advocating for the interests of ISPs and their customers since 2000, CISPA provides a unified voice to address legislative, regulatory and consumer issues as well as to support innovation within the ISP industry.

For more information Contact:
Mike Jackman
Executive Director
California ISP Association
415-388-3216

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Broadband Reality Check

There is a "state of the broadband industry report" report I just came across from the Free Press, Consumers Union and The Consumer Federation of America. The report blasts FCC Chairman Kevin Martin and takes excerpts from an op-ed piece he wrote for the Wall Street Journal and other statements and says Martin's conclusion is either wildly optimistic or intentionally misleading.

Here are the statements/quotes in question:

he United States "leads the world in total number of broadband connections"

"broadband platforms are engaged in fierce competition."

He lauded the Supreme Court's recent Brand X decision and praised the results of the FCC study, proclaiming that "the dramatic growth in broadband services depicted in this report proves that we are well on our way to accomplishing the president's goal of universal, affordable access to broadband by 2007."

The report goes on to say:

The US lacks a broadband policy that will ensure inexpensive broadband access for all.

The standard measure of high-speed Internet used by the FCC is 200 kbps and is too low to carry low-quality video.

The FCC uses a misleading measure of broadband coverage. The Commission counts a ZIP code as covered by broadband service if it contains at least one broadband subscriber. No consideration is given to the price, speed or availability of connections across the ZIP code.

US broadband is expensive. We pay 10-25 times more per megabit than they do in Japan. (While this may be accurate it is a by-product of the US consumer not having broadband options above 4 megabits or so per second. If a service provider was to give the option of having a 100 Mbps connection it would probably cost $100-$200 per month. Broadband cable let's say averages around $45 per month for 4 mbps throughput today.)

Broadband speed is not increasing very quickly

Broadband pricing competition consists of bait and switch tactics as opposed to dropping prices

The FCC knows that Satellite and wireless broadband are losing share and more importantly cable and DSL own 98% of the market.

Open access policies create competition in the broadband market. Open access, or common carriage, for competitive DSL carriers has loosened the dominance of cable modem service in the residential market. Despite gains in service availability, the FCC seems eager to eliminate open access, entrench an incumbent duopoly, and stifle consumer choice.

The United States continues to fall in the world rankings of broadband penetration.
The United States now stands at 16th worldwide in the number of broadband subscribers per 100 inhabitants, placing it far behind countries such as Canada, Japan, and South Korea. The United States also ranked 16th in the net change in broadband penetration from 2003 to 2004, indicating a comparatively slow pace of broadband adoption within the country.

Broadband adoption is highly dependent on socio-economic status. Almost 60 percent of households with incomes above $150,000 have a broadband connection, while less than 10 percent of households with incomes below $25,000 have a connection.

The gap between rural and urban America persists. The broadband penetration rate in urban and suburban households is almost double the rate in rural areas.

Here is another chilling but well-known (to me anyway) piece of information worth reading in the report:

According to the International Telecommunications Union (ITU), last year the United States dropped from 13th to 16th place in broadband penetration, with 11.4 connections per 100 inhabitants. By comparison, South Korea leads the world with 24.9 connections per 100 inhabitants. According to the 2004 broadband penetration data compiled by the Organization for Economic Co-operation and Development (OECD), the United States was 16th in net increases in broadband penetration from 2003 to 2004. This puts the United States near the average for the OECD, and far behind countries such as the England and France, which have made rapid progress in broadband adoption.

In short the study is depressing. US broadband penetration is uncompetitive with the rest of the world and worse yet the government doesn't seem to care about the details. There does need to be a policy. I just witnessed President Bush on TV at a press conference saying that the US has to have the world's best roadway system in order to be competitive with the rest of the world. He said this in support of a new spending bill that will allocate 286 billion dollars for our highway system. In my view, broadband is just as important if not more. When will broadband adoption rates become important enough for the US government to take action? I hope it is soon.

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