At 8/20/2010 09:39 PM, Tom DeReggi wrote:
...
Another great line from Copps (I like Copps):
"I suppose you can't blame companies for seeking to protect their
own interests," the Commissioner concluded. "But you can blame
policy makers if we let them get away with it."
This is the standard regulatory construct. Regulations are supposed
to apply to the corporations, and create a fair field for
competition. Violating rules is one way to make excessive
profit. Another is to buy regulators so that the rules are tilted in
your favor. In the telecom biz, such regulatory capture is the norm.
BUT... He leaves out the reality of, what authority does the
government have to "take over" someone else's business and property
that they paid for with their own money?
How would you like it, if you owned a Giant food, and you invested
money and time to make the shopping market successful, and then
after all teh hard work was done and money invested, The givernment
came in and said, "We are going to over rule your managers and
owners, and we are going to set the prices for consumers, and lower
it to jsut a tad over cost, its our store now." American people are
going to be afraid to start businesses, if the presidence keeps
getting set that the government is going to take over them and
regulate them, to the point where the financial reward (ROI)
potentially could be at risk. Why should broadband be any different
than any other business? The fact is... Regulation and treating
Businesses like Utilities KILLS small business and entrepreneurs.
Well, no. Some businesses *are* utilities. It's not a takeover when
the utiliity is regulated. Utility law is well
established. Utilities are entitled to a fair return on their
investment. It's a low-risk business. Not huge profit, but nice
work if you can get it.
Grocery stores aren't utilities. The key to a utility is that a) it
is not fully competitive (if competitive at all), and b) the
difference between cost and value is left to the user, not the
utility. In other words the utility doesn't charge as much as it can
get away with; it charges enough to make a fair profit, and the user
makes profit. Imagine if the electric company figured out how much
your business would lose if it didn't have power... that's not their business!
Telephone companies were utilities. They built their networks using
utility profits (i.e., basically guaranteed). Then the rules were
changed. They were moved to price cap regulation, so profits were
uncapped, and they could lay off lots of people to raise their
margins. And they were freed of their utility obligations, to make
their service offerings available on a wholesale, nondiscriminatory
basis. So a telco calls itself an ISP but it can clobber other ISPs
because it got its network as a utility. What's the word for this,
"bait and switch", or just plain "theft"? Maybe a nice discrete
lawyerly term would be "conversion of utility property", noting that
in criminal law, "conversion" means theft.
So they should be regulated. Or better yet, split into two
companies. A LoopCo would basically only sell outside plant
facilities (dark copper and fiber), wholesale, to all comers, and be
treated as a rate-of-return utility. Then the ServiceCo could operate
as a competitive player, on the same terms as others. But what we
have now is a ServiceCo who owns the utility plant and keeps it to themselves.
The problem with the Neutrality movement is that it only knows about
the duopoly, the cable and telco ISPs, and proposes regulating all
ISPs in a manner that would hurt the big guys a little and the little
guys, like WISPs, a lot. So VZ, who is impacted the least, is happy
with it. The correct answer is to open the networks, and leave
self-provisioned ISPs (WISPs) alone.
--
Fred Goldstein k1io fgoldstein "at" ionary.com
ionary Consulting http://www.ionary.com/
+1 617 795 2701
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