Hi Tony,

I was in the process of putting together a thoughtful rebuttal, but now this
has become a moot point giving the latest FCC ruling...


August 15-17, 2005

-----Original Message-----
Behalf Of Tony Weasler
Sent: Friday, August 05, 2005 11:53 AM
To: WISPA General List
Subject: [WISPA] Why ILEC regulation is different from Cable and WISP
regulation... WAS: Re: FCC & DSL - WBIA ACTIONRecommendation


  Given your position on this issue, I have to believe that your comments
are partially tongue-in-cheek.  The telcos have had a government-mandated
monopoly for over 50 years where they were allowed to collect monopolistic
profits to build the grand network that they possess today.  They own their
cable plants as a direct result of the money that the public contributed
(and continue to contribute in most
areas) to them; not because they were one of the competitors offering a
top-notch service.  The ILECs continue to control last-mile access to
consumers not because it is impossible for competitors to mirror their
connectivity, but because it is cost-prohibitive to build that
infrastructure when the expected gross return hovers around $300/year  [1].

  ILECs aren't comparable to cable providers for three reasons: 1) cable
providers generally built their networks from capitol generated from their
operations without financial assistance from the government and were not
granted taxation authority to subsidize network construction a la USF; 2)
Cable providers' services have not been a nearly required utility for the
past 50 years.  3) Cable providers have cost-analogous competition in
virtually every market from Satellite based television providers, video
rental stores, online information services, etc.

ILECs aren't comparable to WISPs for the same reasons above and for these
additional reasons: 1) WISPs for the most part haven't had any assistance
from the public sector that wasn't available to any other business at the
time; 2) WISPs could have a viable competitor enter their market at any time
for a relatively low start-up cost.  The only potentially limiting factor is
tower locations and as many of you know, if one municipality rejects you,
you just beam it in from outside the town [2]; 3) Most WISPs have little
power to eliminate competition by undercharging because they don't have the
ability to generate monopolistic profits from other operations.

The ILECs are deathly afraid that the government will not allow them to
exclusively exploit their monopoly-gained infrastructure because they know
that their operation is so incredibly inefficient and out-dated that they
can't compete with other carriers even when they are on slightly-elevated
ground.  If $14.95/month business 1.5MB DSL isn't desperate dumping to
eliminate competition, I don't know what is.  They couldn't do this without
their monopoly phone line revenue from the past 75 years.  How much do they
charge for a T-1? $700/month?  Is it really that much different?

Allowing ILECs to prevent competitors from using their newly-built
infrastructure in 2004 was a shaky proposition because they usually possess
the ability to build that infrastructure as a direct result of their
previous monopoly.  Allowing ILECs to prevent others from using their
existing infrastructure that was paid for as a direct result of their
monopoly amounts to nothing less than government corporate welfare which
will lead to fewer choices for consumers [3] and higher prices [4] for the
services that they have the privilege of ordering from the duopoly.

 - Tony

P.S.  Anyone want to bid on this with me?  Oh, you don't have enough
capital?  I can't imagine why...

[1] Assuming $50/month revenue and a 50% chance that they choose a
competitor.  Yes, I know that we can bundle services to get this number to
$100 or more, but that generally hasn't happened and it's simpler to just
talk about Internet-based services.  Additionally, the _net_ return from an
individual consumer probably hovers around $200/year.  Can you even build
wireless connectivity for this kind of return while running the inefficient
operations that the ILECs have?

[2] Maybe this part of WISP operations should be regulated.  I can see some
benefit to having an equal-access-to-towers regulation that covers all
structures in an economically- or politically-limited tower environment.

[3] Most ISPs rely on ILEC connectivity for either last-mile access to their
customers or for their interconnectivity to the Internet.  If the ILECs are
allowed to discontinue or artificially inflate the cost of these services we
will see a similar loss-of-competition that occurred three years ago with
competing DSL providers.

[4] They will probably look lower though. I am amazed by how foolish most
consumers act.  Many actually believe that $14.95/month DSL + $50/month
(required) phone line is a better deal than $35/month Internet and $25/month
(optional) phone line.  Maybe a consistent pricing system is a better way
for government to foster broadband development.

On 8/4/2005 12:07 PM, Charles Wu created:
> Here's the issue
> If you vote to regulate the bells, then you (as WISPs) must also be 
> ready to ultimately submit yourself (or at least your facilities based 
> network
> infrastructure) to regulation sometime in the near future - to requote
> myself...the government won't support "double standards"
> Good or bad, that's hard to say
> -Charles
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