Comments on: You won’t have broadband competition without regulation http://blogs.reuters.com/felix-salmon/2014/02/21/you-wont-have-broadband-competition-without-regulation/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: KenG_CA http://blogs.reuters.com/felix-salmon/2014/02/21/you-wont-have-broadband-competition-without-regulation/comment-page-1/#comment-49334 Wed, 26 Feb 2014 05:43:46 +0000 https://blogs.reuters.com/felix-salmon/?p=23151#comment-49334 Realist, I knew that number was ridiculously low, but I couldn’t let it go.

Still, $20 billion in capex for a telco with revenue of $128 billion is not special. And I would bet a disproportionate amount is spent on their LTE network. I doubt much is spent expanding their fiber footprint or upgrading their DSL service.

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By: realist50 http://blogs.reuters.com/felix-salmon/2014/02/21/you-wont-have-broadband-competition-without-regulation/comment-page-1/#comment-49327 Tue, 25 Feb 2014 21:08:26 +0000 https://blogs.reuters.com/felix-salmon/?p=23151#comment-49327 KenG – that $1.2 billion number is clearly not correct. Any single major company in wired or wireless broadband markets – AT&T, Verizon, Comcast, Time Warner Cable, etc. – spends more than that on network capital expenditures every year. To take just 1 example, AT&T’s total cap ex spending is about $20 billion per year – http://www.lightwaveonline.com/articles/ 2013/04/at-t-trims-capex-estimates-for-2 014-and-2015.html

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2014/02/21/you-wont-have-broadband-competition-without-regulation/comment-page-1/#comment-49321 Tue, 25 Feb 2014 13:41:15 +0000 https://blogs.reuters.com/felix-salmon/?p=23151#comment-49321 @RichardBennett, “American firms have invested $1.2B in wired and wireless broadband networks because this is a dynamic market.”

The telcos love to brag about the large sounding amounts they invest in their networks, but $1.2B is not a lot of money when you consider there are over 300 million people in this country. Compare that number with their revenue, which is in the hundreds of billions of dollars, and it seems pathetically small.

“Broadband is a dynamic technology, and its markets are built on a race between competitors to provide services that are faster and better year after year”.

Verizon has not increased the speed of their DSL service, nor offered FiOS, at two of the homes where I manage the communications service. In over 10 years. It would not cost a lot relative to their monthly fee to increase the speed of those DSL connections, but they choose not to make that investment. And they have halted expansion of their FiOS service. There is no race to provide services that are faster or better, or if there is a race, it is in increasing advertising budgets for marketing the fantasy that they offer “high speed” broadband.

LTE cannot be a serious alternative to wired broadband in urban and suburban areas, as it is a shared medium, unlike DSL or fiber. Also, the main attraction for LTE for the carriers is that their data caps are low and they will be easily exceeded as video distribution shifts more to the Internet.

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By: RichardBennett http://blogs.reuters.com/felix-salmon/2014/02/21/you-wont-have-broadband-competition-without-regulation/comment-page-1/#comment-49304 Mon, 24 Feb 2014 04:13:42 +0000 https://blogs.reuters.com/felix-salmon/?p=23151#comment-49304 Let’s try this again since my comment hasn’t posted yet. This time without links.

This column is severely factually-challenged. Granted, Tyler Cowan doesn’t understand broadband technology in any particularly deep and detailed way, but he gets the key aspect of that technology better than Felix Salmon does. Broadband is a dynamic technology, and its markets are built on a race between competitors to provide services that are faster and better year after year. American firms have invested $1.2B in wired and wireless broadband networks because this is a dynamic market.

Europe does not provide broadband cheaper than the US does when we correct for the two main cost factors, speed and distance, and include the effects of subsidies and taxes. In fact, only half of European residences have access to any kind of cable service, while close to 95% of American residences are passed by cable.

Local loop unbundling is a notion that applies to the telephone network, a system in which every residence has a unique strand of wire connecting it to a phone company office, but it doesn’t work for cable TV networks because 100 – 400 homes share a common wire. You can’t just disconnect a wire to the cable company to connect a given consumer to an alternate ISP. Unbundling cable would require access at cable company switch and close coordination between the cable company and the ISP. Even Europe doesn’t mandate that.

Traditional telco unbundling is one of the things that holds Europe back. American telcos are shortening their local loops by building neighborhood nodes with fiber backhaul. Europe can’t build these without coordinating a move for a half dozen minor ISPs and providing real estate for them in every node. This is why European regulators want to adopt the American system.

American networking companies are installing 19 million miles of fiber optic cable every year in order to speed up their networks. Verizon is testing LTE running at 80 Mbps and plans to use this to provide a competitive broadband alternative in rural and exurban areas. Europe can only dream of the kind of pervasive LTE we have here.

It’s always a good idea to do a little research before expressing opinions and attacking those who understand the issues better than you do. Here’s a start: Google “The Whole Picture Where America’s Broadband Networks Really Stand” & “The European Union’s Broadband Challenge”. Europe is not broadband utopia and unbundling doesn’t help.

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By: skeptonomist2 http://blogs.reuters.com/felix-salmon/2014/02/21/you-wont-have-broadband-competition-without-regulation/comment-page-1/#comment-49302 Sun, 23 Feb 2014 23:47:10 +0000 https://blogs.reuters.com/felix-salmon/?p=23151#comment-49302 The economics of cable/internet services are pretty complicated and changing rapidly. Wouldn’t it be at least approximately correct to say that cable companies have been selling TV and that internet has been gravy on top of that? And maybe phone service as well? And the cable TV business seems to have been trapped into a model in which the content providers keep increasing the number of channels and ram them down the throats of the cable companies, the end-user ultimately paying. But now content is shifting to the internet, so things may flip to prices based more on internet. If cable TV dies, this will not make internet provision cheaper.

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By: RichardBennett http://blogs.reuters.com/felix-salmon/2014/02/21/you-wont-have-broadband-competition-without-regulation/comment-page-1/#comment-49301 Sun, 23 Feb 2014 22:37:56 +0000 https://blogs.reuters.com/felix-salmon/?p=23151#comment-49301 This column is severely factually-challenged. Granted, Tyler Cowan doesn’t understand broadband technology in any particularly deep and detailed way, but he gets the key aspect of that technology better than Felix Salmon does. Broadband is a dynamic technology, and its markets are built on a race between competitors to provide services that are faster and better year after year. American firms have invested $1.2B in wired and wireless broadband networks because this is a dynamic market.

Europe does not provide broadband cheaper than the US does when we correct for the two main cost factors, speed and distance, and include the effects of subsidies and taxes. In fact, only half of European residences have access to any kind of cable service, while close to 95% of American residences are passed by cable.

Local loop unbundling is a notion that applies to the telephone network, a system in which every residence has a unique strand of wire connecting it to a phone company office, but it doesn’t work for cable TV networks because 100 – 400 homes share a common wire. You can’t just disconnect a wire to the cable company to connect a given consumer to an alternate ISP. Unbundling cable would require access at cable company switch and close coordination between the cable company and the ISP. Even Europe doesn’t mandate that.

Traditional telco unbundling is one of the things that holds Europe back. American telcos are shortening their local loops by building neighborhood nodes with fiber backhaul. Europe can’t build these without coordinating a move for a half dozen minor ISPs and providing real estate for them in every node. This is why European regulators want to adopt the American system.

American networking companies are installing 19 million miles of fiber optic cable every year in order to speed up their networks. Verizon is testing LTE running at 80 Mbps and plans to use this to provide a competitive broadband alternative in rural and exurban areas. Europe can only dream of the kind of pervasive LTE we have here.

It’s always a good idea to do a little research before expressing opinions and attacking those who understand the issues better than you do. Here’s a start: http://www.itif.org/publications/whole-p icture-where-america-s-broadband-network s-really-stand & here’s something more recent: http://www.aei.org/outlook/economics/inn ovation/internet/the-european-unions-bro adband-challenge/

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By: simsimsim http://blogs.reuters.com/felix-salmon/2014/02/21/you-wont-have-broadband-competition-without-regulation/comment-page-1/#comment-49297 Sat, 22 Feb 2014 23:47:58 +0000 https://blogs.reuters.com/felix-salmon/?p=23151#comment-49297 Felix is not right about EU and cross border texting. Roaming is heavily regulated in EU and all cross country SMS cost 8 cents (will fall to 6 in July).
That means that you often pay much more for local texting than cross country texting.

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By: crocodilechuck http://blogs.reuters.com/felix-salmon/2014/02/21/you-wont-have-broadband-competition-without-regulation/comment-page-1/#comment-49291 Sat, 22 Feb 2014 04:50:22 +0000 https://blogs.reuters.com/felix-salmon/?p=23151#comment-49291 Deftly skewered, Felix. And Ken G., thanks for your equally insightful logic & comments upthread.

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2014/02/21/you-wont-have-broadband-competition-without-regulation/comment-page-1/#comment-49289 Sat, 22 Feb 2014 04:24:39 +0000 https://blogs.reuters.com/felix-salmon/?p=23151#comment-49289 y2k, thanks, but I wouldn’t say we are usually on the opposite side of every issue, I think it’s closer to 50-50. If it was more like 90-10 you would hear from me more often. :-)

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By: RayLopez http://blogs.reuters.com/felix-salmon/2014/02/21/you-wont-have-broadband-competition-without-regulation/comment-page-1/#comment-49287 Sat, 22 Feb 2014 03:53:59 +0000 https://blogs.reuters.com/felix-salmon/?p=23151#comment-49287 Tyler Cowen is right but so is Felix. In a natural monopoly you get innovation (Google “Ma Bell”) but also you get barriers to entry. However, you do get lower prices (my cable bill in the US is less than fiber optic and gets the job done for productive work as opposed to watching movies). But the potential gains that come from being a monopolist are sufficient for competitors to want to come into the sector–if regulators allow it–and this creates innovation. A good book on this (and the AT&T breakup) is the 1987 book by economist P. Temin.

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